The State of Research on Arbitration and EU Law

109 Pages·2016·1.18 MB·English

LAW 2016/23
Department of Law
The State of Research on Arbitration and EU Law:
Quo Vadis European Arbitration?

Barbara Alicja Warwas

Electronic copy available at: https://ssrn.com/abstract=2878894
Electronic copy available at: https://ssrn.com/abstract=2878894
European University Institute
Department of Law

THE STATE OF RESEARCH ON ARBITRATION AND EU LAW:
QUO VADIS EUROPEAN ARBITRATION?
Barbara Alicja Warwas

EUI Working Paper LAW 2016/23

Electronic copy available at: https://ssrn.com/abstract=2878894
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ISSN 1725-6739

© Barbara Alicja Warwas, 2016
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Author contact details

Barbara Warwas
Lecturer in Comparative Law
The Hague University of Applied Sciences
[email protected]
Abstract
The goal of this article is to provide a systematic literature review of studies on arbitration in recent
decades. The major focus is on emerging developments in arbitration and EU law. The review will thus
map the research on these developments and summarize its major findings to provide a better
understanding of new trends in the scholarly literature on arbitration and EU law, and to identify research
gaps to be addressed in the future. Just as almost 20 years ago Pieter Sanders addressed the then
emerging problems of arbitration practice and posed a question: “Quo Vadis Arbitration?” this paper
asks the question “Quo Vadis European Arbitration”? Hence, it aims at depicting the current and future
direction of EU law and arbitration by proposing a common platform for discussion on these two distinct
yet increasingly overlapping fields.
Keywords
Arbitration, EU law, arbitration scholarship, empirical research, FIDIpro project
Table of contents

ABSTRACT ................................................................................................................................... 6
KEYWORDS ................................................................................................................................. 6
TABLE OF CONTENTS ................................................................................................................... 7
INTRODUCTION ............................................................................................................................ 1
Arbitration and EU law: preliminary remarks ...................................................................................... 2
Methodology ......................................................................................................................................... 3
Planning .............................................................................................................................................. 3
Conducting the review ........................................................................................................................ 5
Reporting and dissemination .............................................................................................................. 5
Definitions and categories .................................................................................................................... 6
LITERATURE ON LEGAL ISSUES REGARDING ARBITRATION AND EU LAW .................................... 9
Procedural aspects ................................................................................................................................ 9
Arbitration and EU law: EU competences v. harmonization ........................................................... 10
Arbitration and EU procedural law: Brussels regime, anti-suit injunctions, enforcement of arbitral
awards and judgments ...................................................................................................................... 14
Arbitral tribunals, CJEU, and preliminary rulings ........................................................................... 17
EU Common Commercial Policy and investor-State arbitration ..................................................... 21
The increasing use of arbitration in EU sectors .................................................................................. 28
Consumer arbitration/ADR .............................................................................................................. 28
Arbitration and EU competition law ................................................................................................ 37
Arbitration and tax law ..................................................................................................................... 41
Arbitration/ADR in other (EU) sectors ............................................................................................ 43
Arbitration and WTO law ................................................................................................................... 46
LITERATURE ON ARBITRATION PRACTICE .................................................................................. 47
Transparency in arbitration ................................................................................................................. 47
Accountability (liability) of private arbitration actors ........................................................................ 53
Applicable law .................................................................................................................................... 56
EMPIRICAL STUDIES ON ARBITRATION ....................................................................................... 57
Most prevalent topics: setting the scene ............................................................................................. 58
Investor-State arbitration and arbitrator bias ...................................................................................... 61
Insights into decision making by arbitrators (including behavioural science research methods) ....... 68
Arbitration of publicly oriented disputes ............................................................................................ 72
Arbitration and transparency .............................................................................................................. 74
Summaries of selected ground-breaking empirical studies on arbitration .......................................... 75
Yves Dezalay and Bryant G. Garth, “Dealing in Virtue: International Commercial Arbitration and
the Construction of a Transnational Legal Order” (1996)................................................................ 75
Studies at Queen Mary School of International Arbitration (2006 – 2016) ..................................... 75
Joshua Karton, “The Culture of International Arbitration and The Evolution of Contract Law”
(2013) ............................................................................................................................................... 79
Tony Cole, et al., Legal Instruments and Practice of Arbitration in the EU (2015) ......................... 80
FINDINGS ................................................................................................................................... 80
General findings .................................................................................................................................. 80
Findings in the context of the FIDIpro project ................................................................................... 82
REFERENCES ............................................................................................................................. 85
APPENDIX: SELECTED LITERATURE ........................................................................................... 87
Introduction1
Academic studies of arbitration have proliferated in recent decades. This is partially the function of the
professionalization of international arbitration practice. Such professionalization entailed the retirement
or semi-retirement of the “grand old man” of arbitration and the development of new practitioners and
arbitrators that left the door of arbitration practice ajar when their predecessors passed them the baton
in the arbitration race. These studies are driven by varied objectives (e.g. purely academic, policy
making, arbitration practice-oriented), imply different methodological techniques (e.g. doctrinal,
empirical), and focus on a variety of topics, including but not limited to, the legal, political, and
psychological issues that arbitration involves. Notably, this abundant arbitration scholarship follows two
streams.
On the one hand, one can come across research largely revolving around the practicalities of arbitration
whose main objective is to reveal how arbitration works in practice. Here, an impressive amount of
empirical studies come to the fore. These studies provide insights (often informed by qualitative and/or
quantitative analyses of data provided by arbitration practitioners) into legal and extra-legal factors that
influence arbitrators’ decision making, as well as into procedural and substantive developments in
arbitration. This type of literature is written mostly by members of the arbitration community (who are
often academics) but there are also an increasing amount of interdisciplinary studies on arbitration that
test the ways in which arbitrators act in the course of arbitration, especially using methods of behavioural
studies such as psychology.
On the other hand, one can find literature on the interplay between arbitration and law. This type of
literature is often more critical than studies on the practice of arbitration. It addresses the deficiencies of
private arbitration against the background of orthodox questions of the legitimacy of international law,
powers of States to provide access to justice for citizens, or—most recently—of the legality of arbitration
in its different variants vis-à-vis European Union (EU) law. Within the latter aspect, both the most recent
and the most passionate contributions focus on the inclusion of Investor State Dispute Settlement (ISDS)
mechanisms in EU trade and investment agreements with third parties and recent proposals by the
European Commission for creation of an Investment Court System together with the implications for
the regulatory and judicial competences of the EU. There are also increasing contributions that point to
the growing promotion of arbitration or alternative dispute resolution (ADR) in other fields of EU law,
in particular consumer arbitration (or ADR) and arbitration in EU sectoral disputes involving
competition law, tax law, energy, telecommunications, and other publicly relevant types of dispute.
The goal of this article is to provide a systematic literature review of studies on arbitration in recent
decades. The major focus is on emerging developments in arbitration and EU law. The review will thus
map the research on these developments and summarize its major findings to provide a better
understanding of new trends in the scholarly literature on arbitration and EU law, and to identify research
gaps to be addressed in the future. Just as almost 20 years ago Pieter Sanders addressed the then
emerging problems of arbitration practice and posed a question: “Quo Vadis Arbitration?” this paper
asks the question “Quo Vadis European Arbitration”? Hence, it aims at depicting the current and future
direction of EU law and arbitration by proposing a common platform for discussion on these two distinct
yet increasingly overlapping fields.

1 This paper was written within the framework of the Finland Distinguished Professor Programme (FIDIpro) project on
External Dimension of European Private Law, sponsored by the Finnish Academy of Science and led by Professors Hans-
W. Micklitz (European University Institute) and Pia Letto-Vanamo (University of Helsinki). For a description of the project
see the website of the Institute of International and Economic Law of the University of Helsinki at:
http://www.helsinki.fi/katti/english/FiDiPro_project.htm (accessed 25 November 2016).
1
Barbara Alicja Warwas
Arbitration and EU law: preliminary remarks
Historically, arbitration and EU law were two mutually exclusive regimes. Arbitration was already
excluded from the scope of application of the 1968 Brussels Convention on jurisdiction and enforcement
of judgments in civil and commercial matters and the 2001 Brussels Regulation, arbitral tribunals were
categorically not permitted to seek preliminary rulings from the Court of Justice of the EU (CJEU), and
businesses could not invoke arbitration provisions in their contracts with consumers. Most recently, this
status quo has changed. The revisions of the 2001 Brussels Regulation entailed a discussion whether
arbitration should remain outside the scope of the European Justice Area. Notably, it was the European
Commission that proposed the integration of arbitration with the Brussels regime.2 Although this
proposal was eventually not implemented, it revived discussion on the desirable spot for arbitration
within EU procedural law terrain.
Another change concerned the new EU exclusive competence in EU common commercial policy that—
since the coming into force of the Lisbon Treaty—entails a new discussion on the role of the EU, in
place of Member States, in concluding EU international trade and investment agreements and in
negotiating ISDS mechanisms to be contained therein with non-EU countries as potential parties to such
agreements. Moreover, the new EU competence in the field of foreign direct investment has also
prompted a discussion on the future of around 190 bilateral investment treaties entered into by Member
States prior to those changes (so-called intra-EU BITs) that the Commission now intends to terminate.
To add to this debate on the changing interplay between EU law and arbitration, the CJEU, by advancing
the concept of EU public policy in Eco Swiss, opened the door for the potential annulment of arbitral
awards by national courts based on the ground that an arbitral award is contrary to EU public policy
including EU competition policy.3 The debate on the role of EU public policy in arbitration, when
confronted with recent discussion on the potential inclusion of ISDS in EU investment and trade
agreements, also entails further proposals to “relax” EU procedural law in the field of preliminary
reference procedure under Art. 267 of the Treaty of the Functioning of the EU (TFEU) to allow arbitral
tribunals to seek preliminary rulings before the CJEU.4
Finally, the European Commission has recently either encouraged or directly imposed arbitration (and
so-called “out-of-court dispute resolution”) in a number of disputes concerning EU law. These entail the
promotion of consumer ADR and online dispute resolution (ODR) under Directive 2013/11/EU of the
European Parliament and of the Council of 21 May 2013 on Alternative Dispute Resolution for
Consumer Disputes and Regulation (EU) No 524/2013 of the European Parliament and of the Council
of 21 May 2013 on Online Dispute Resolution for Consumer Disputes. Additionally, arbitration has
been promoted in a variety of sector-specific directives including, inter alia: Directive 2000/31/EC of
the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information
society services, in particular electronic commerce, in the Internal Market (the E-Commerce Directive),
Framework Directive 2002/21/EC on a common regulatory framework for electronic communications
networks and services with further amendments, Directive 2008/48/EC of the European Parliament
and of the Council of 23 April 2008 on credit agreements for consumers, Directive 2009/79/EC of the
European Parliament and of the Council of 13 July 2009 concerning common rules for the Internal
Market in electricity, and Directive 2009/73/EC of the European Parliament and of the Council of 13
July 2009 concerning common rules for the Internal Market in natural gas. This list of EU directives
that have increasingly adopted provisions on arbitration/ADR is not exhaustive. Nevertheless, it
demonstrates the shifting approach toward arbitration by EU officials. The shifts from hostility toward
promotion of ADR in different business to business (B2B) and business to consumer (B2C) disputes at

2 George A. Bermann, “Reconciling European Union Law Demands with the Demands of International
Arbitration,” Fordham International Law Journal 34, no. 5 (2011): 1197.
3 For discussion on the concept of EU public policy see ibid., 1200–1211.
4 See Section entitled: “Arbitral tribunals, CJEU, and preliminary rulings”.
2