A Study Of Mandatory Rules On International Commercial Arbitration

Under the current situations of globalization in markets for goods, services, technology and monies, it is increasingly popular for transnational dealers to employ arbitration rather than litigation orientated by one country to settle disputes between them. Nevertheless, this kind of arbitration faces varieties of issues on mandatory rules. Analysis and comments on those issues and their solutions would be contributable to the adequate settlement of similar future disputes, the satisfaction of reasonable expectations from parties in international business, the healthy development of the international commercial arbitration industry, as well as the perfection of China's relevant system.With the methods of theories based on the practices, comparative analysis and trans-disciplines, this dissertation intends to make an relatively complete, in-depth and systematic exploration of pertinent problems arising from mandatory rules concerning international commercial arbitration. This dissertation consists of 6 Chapters in addition to an introduction. The first part of Chapter 1 deals with the definition of international commercial arbitration, mandatory rules and other relevant terms. This dissertation takes into consideration in a broad sense the international commercial arbitration including commercial arbitration in which relevant factors are connected with more than one country or the nature of the disputes between parties is international. Mandatory rules in this study refer to as those rules that cannot be derogated from beforehand by the parties. The terms 'public policy'rules and'directly applicable law'have close relation to the concept of mandatory rules. This dissertation agrees with some scholars on that mandatory rules include but is not limited to public policy rules and directly applicable law. The second part discusses about the source of mandatory rules on the international commercial arbitration. Mandatory rules on the international commercial arbitration can be found in international treaties, domestic statutes, case law, lex mercatoria and other international arbitration rules made by varieties of non-government organizations. The fundamental theories for mandatory rules on the international commercial arbitration can be divided into the following two groups: basic theories for general mandatory law ; basic theories for international commercial arbitration system. Chapter 1 just explores the later further while the former is reserved for other Chapters of this dissertation. It is well known that the jurisdictional theory, the contractual theory, the hybrid theory and the autonomous theory are basic theories for international commercial arbitration system. All these theories reflect certain aspects of international commercial arbitration system and offer a valuable theoretic base for the adequate creation and implementation of mandatory rules on the international commercial arbitrationChapter 2 explores mandatory rules for the validity of the international commercial arbitration agreements which mainly comprises the subjective arbitrability, the objective arbitrability, the legality of form and content. For mandatory rules on the subjective arbitrability, peculiarity is that a number of countries deny or limit the capacity of public legal persons to make an international commercial arbitration agreement. Although lots of international commercial arbitration tribunals has adopted directly applicable methods to solve the disputes over the capacity of public legal persons, transnational dealers need to check relevant mandatory rules on the capacity of their counterparties who are public legal persons. As far as mandatory rules on the objective arbitrability, a obvious phenomena or trend is that more and more kinds of disputes are arbitrable. Some scholars and practitioners cheer for this trend while others express their criticisms. In the end, the formers get more support from legislative or judicial organs in lots of countries. The latter's critic voices, however, urge us to think the reforms of international commercial arbitration systems. Courts of law at different place or arbitration tribunals often adopt different applicable methods for mandatory law on the objective arbitrability. While the users of international commercial arbitration ought to notice the differences, relevant courts of law or arbitration tribunals should care about the users'reasonable expectation. Mandatory rules on form and content also play a vital role on determination of the validity of an international commercial arbitration agreement. The users of international commercial arbitration should pay special attention to case law on issues of form made by the judicial organs of contracting parties under New York Convention or other treaties. They should also concern themselves with mandatory rules on content including the certainty and legality.Chapter 3 presents an analysis of mandatory rules on international commercial arbitration proceedings. This Chapter gives much weight to fundamental mandatory rules including the requirement of arbitrator's independence & impartiality, party equality and due process. Scholars offer theoretic bases for these fundamental mandatory rules from the angels of fair trial right of international human rights conventions, constitutional requirements, natural justice and so on. These fundamental mandatory rules mainly concern disclosure of conflict of interest by an arbitrator, disqualification of an arbitrator, equal treatment of parties on the composition of the arbitration tribunal, and right of challenge owned by parties. In addition, the last part of this Chapter discusses other mandatory rules on international commercial arbitration proceedings such as the number requirements for the arbitration tribunal and arbitrators'liability or their exemption.Chapter 4 firstly concerns applicable standards for substantive mandatory rules and their influence on international commercial arbitration. There are typically 3 types of applicable standards. The territorial standard, among them, is widely accepted as a base for applying substantive mandatory rules and considered to be in compliance with international law. This standard, however, was refused to be employed occasionally by certain international commercial arbitration tribunals. The second type of applicable standard is relied upon nationality which is nevertheless not popular in the practices of international commercial arbitration. The third kind of applicable test is extraterritorial one. General speaking, international commercial arbitration tribunals are reluctant to adopt extraterritorial standard except that it is justified to do that. In the middle part of this Chapter, the power and duty of international commercial arbitration tribunals to apply mandatory rules is explored. In the last part of this Chapter, the methods to determine the application of substantive mandatory rules are analyzed. The applying method on tribunals'own actions or requested by one of the parties, the traditional applying method of substantive mandatory rules, the direct applying method of substantive mandatory rules of the seat of contractual performance, and the method of"Special Connection"are mentioned one by one and discussed in detail.Chapter 5 studies mandatory rules for judicial review on international commercial arbitration. Disputes over international commercial arbitration could be the ones over existence or validity of international commercial arbitration agreements, legal composition of international commercial arbitration tribunals, competence of international commercial arbitration tribunals, legality of international commercial arbitration proceedings, annulment of international commercial arbitration awards, recognition or enforcement of international commercial arbitration awards and so on. All these disputes can be the subject of judicial review. This dissertation mainly focuses on the exploration of mandatory rules for judicial review on international commercial arbitration agreements, annulment of international commercial arbitration awards, recognition and enforcement of international commercial arbitration awards.Chapter 6 is the last but not the least Chapter. This Chapter provides an overview of China's mandatory rules on international commercial arbitration and their shortcomings and makes some suggestions to rectify them. This dissertation argues that China's present mandatory rules on international commercial arbitration have lots of flaws in the aspects of validity of international commercial arbitration agreements, international commercial arbitration proceedings, annulment of international commercial arbitration awards, recognition and enforcement of international commercial arbitration. So China should extinguish the above flaws by revising the Arbitration Act and other means as soon as possible. As far as mandatory rules on validity of international commercial arbitration agreements, China should make clearer about the capacity of the average public entities to make international commercial arbitration agreements, the scope of objective arbitrability, and define the reflections on the written form of international commercial arbitration agreements, meanwhile, softens the mandatory requirements of content of international commercial arbitration agreements. For mandatory rules on international commercial arbitration proceedings, China should only require arbitrators have the completely civil competence and give up all other mandatory requirements under the existing Arbitration Act. In alternatives, China should focus on imposing disclosure, other due process duties and liabilities on international commercial arbitrators. In the aspect of annulment of international commercial arbitration awards, China should provide legally mandatory bases for all those awards made by the arbitration tribunals at the seat of one place of Mainland China while'violation of China's international public policy'is added as one reason to set aside an international commercial arbitration award. China should also shorten the periods to annul international commercial arbitration awards except that China's international public policy is violated. For mandatory rules on recognition and enforcement of international commercial arbitration awards, China should improve rules on determining the nationality of an international commercial arbitration award and prolong the period for the request of recognition and enforcement. Certainly, China should also improve the enforcement proceedings.