A Study On Arbitral Power In International Commercial Arbitration

In recent years, arbitration has become increasingly popular for internationaltrade of commerce; it has multiple advantages including efficiency, flexibility,neutrality and professionalism. Meanwhile, recent years also witness the rapiddevelopment of international commercial arbitration in China. The legislation,however, has been constantly criticised for its imperfection. Among all the problems,overlooking the essential roles of arbitral tribunal is considered to be a serious one,which results in at least three issues, including parties can’t and legislations don’tgrant arbitral trbinal enough power, arbitral tribunal lacks necessary power to resolvethe disputes, and the arbitral power is not supervised effectively. Therefore, this essayfocuses on the integrated system study of international commercial arbitral power,based on the research of the trend of legislation and practice abroad; hopefully thisessay may help the legislative authority to improve the arbitral power in China.This essay contains six chapters; the first chapter focuses on the definition ofinternational commercial arbitral power. This essay has given a clear and broadmeaning of international commercial arbitral power, which it refers to the authority ofthe arbitral tribunal; by the consent of the parties and with the legal authority, itresolves international disputes of commerce and rendering an enforceable award.The term “international” means when the parties of arbitration, the subject of disputeor the content of dispute, content any cross countries/nations element. And the word “commercial” can be defined as all commercial related issues including bothcontractual and non-contractual relationships. Based on these, internationalcommercial arbitral power has three main characters,(i) the source of authority comesfrom the parties and the legislations,(ii) its goal is to be used as a dispute resolutionand (iii) the power of the arbitral tribunal is safeguarded by judicial power. Thesethree characters help to distinguish arbitral power from power of judges, arbitralinstitution and mediator. The nature of arbitration also directly affects the nature ofarbitral power, and for now the hybrid theory can reflect arbitral power in a moredirect way and it helps to support the arbitration system. Besides, the value orientationof international commercial arbitral power also affects the regulation of arbitral powerand its exercise. Freedom is the fundamental value orientataion of internationalcommercial arbitral power. Meanwhile, justice and effectiveness, which are bothessential values, should be balanced. When there is conflict between justice andefficiency during the process of settling disputes, we should make sure efficiency gofirst.The second chapter discusses the sources of international commercial arbitralpower. Arbitration is based on the autonomy of the parties; therefore the consent ofthe parties may determine almost every aspect in arbitration. To begin with, a validarbitration agreement is vital imporantant to arbitration jurisdiction, and subject topro-arbitration policy, the validity requirements of arbitration agreement are tendingto be less strict under leading countries’ legislation and practice. For example, thepractice of pathological clauses basically shows the only issue that matters is the freewill of parties. Secondly, principle of party autonomy is also the foundation ofarbitration process, so parties have the rights to decide the composition of arbitraltribunal, as well as to grant arbitral tribunal authority to decide on both procedural andsubstancial matters. Moreover, the law is the other important source for arbitral power,it not only determines what matters are capable of settled by arbitration, and it alsoestablishes a complete system for arbitration proceeding. In a nutshell, Partyautonomy and legal authority are both the essential sources for arbitral power.Chapter three focuses on the specific contents of international commercial arbitral power. By the view on the distribution and limitation of power on the arbitraltribunal, this chapter firstly makes a profound analysis of the principle ofcompetence-competence. Although there are different opinions on negative effect ofcompetence-competence, arbitral tribunal generally should have the priority to decideits jurisdiction in order to guarantee the effectiveness of competence-competence.Besides, judicial consideration of jurisdictional issues should be permitted right afterarbitral tribunal’s decision-making in order to be more efficient. Secondly, unlessotherwise agreed by the parties or regulated by the authority, it shall be for thetribunal to decide all the matters in arbitration proceeding, including evidentialmatters and interim measures, etc. Moreover, the national courts should provideassistance when it’s necessary, such as collecting evidence from third parties. Lastly,arbitral tribunal has the power to make the award, which means deciding applicablelaws, resolving the disputes and correcting, interpreting the award as well as makingadditional award. With policy of pro-arbitration, general speaking, arbitral tribunalhas more lenient discretion and higher power nowadays.Chapter four addresses the exercise of international commercial arbitral power.Firstly, it shows the three basic principles in exercising arbitration power,(i)following the agreement of parties and law,(ii) due process and (iii) efficiency.Secondly, the way of exercising the power is discussed. By comparing the differentpractices of arbitral power in different countries, when a majority opinion can’t bereached, following the presiding arbitrator’s opinion is more efficient. Also byallowing the presiding arbitrator to form the sole decision on procedural matters isanother alternative method of decision making. Another issue that is discussed by thischapter is the legitimacy of truncated tribunal; on one hand, there are practical reasonsto expect the tribunal to continue the proceeding, on the other hand, by doing so thedue process standard may not be met. Hence, the tribunal should be more cautious onthis issue and follow the applicable law to deicide whether to continue the proceedingor not. Lastly, this chapter discusses three improper behaviors of the tribunal (i) thesituation when arbitral tribunal has no power, or (ii) exceed arbitral power, or (iii) failto exercise arbitral power. Chapter five focuses on the supervision of international commercial arbitralpower. Whenever there is power involves, supervision of such power is required,arbitral power is no exception. There are two basic methods to supervise the arbitraltribunal:(i) direct control on the responsible arbitrator by holding him/her legallyliable or (ii) control on the result, supervising the arbitral award. These two methodshelp to supervise the arbitrators to exercise their power, and at the same time thesemethods should not affect the independency and the neutrality of the arbitral tribunal.In a word, supervision is necessary but it can’t be over excessive.Chapter six focuses on Chinese legislative issues on international commercialarbitral power. China is facing multiple problems on arbitral power, includingparties can’t and legislations don’t grant arbitral trbinal enough power, arbitraltribunal lacks necessary power to resolve the disputes, and the arbitral power is notsupervised effectively. Firstly, the legislative authority in China doesn’t recognize theimportance of party autonomy and the requirements of arbitration agreement areoverly strict. The law in China hasn’t grant enough power to arbitral tribunal, neitherhas it valued the national court’s assistance to arbitral tribunal. Secondly, arbitraltribunal doesn’t have enough power to control the arbitration process. China is one ofthe minority countries that do not affirm the principle of competence-competence; thearbitral tribunal does not have the authority to order the parties nor any third parties todeliver evidence, and the arbitral tribunal also lacks the authority to decide on interimmeasures. The judicial authority in China only pays attention to supervise the arbitraltribunal rather than assist it. The lack of authority of arbitral tribunal has affected theefficiency of arbitration in China. Lastly, the liability of arbitrators in China isunreasonable; the period of judicial review is obviously too long; what’s more, thestandards of judicial review are also unwise and thoughtless. Due to all the issuesabove, China should improve its arbitration system by amending the currentlegislation.