Arbitration: refusal of a request for setting aside an arbitral award

The Commercial Court of Appeals refused an appeal against the judgement by which the Court had refused a request for setting aside an arbitral award. Such request had been filed against a decision issued by the Tribunal General de Arbitraje de la Bolsa de Comercio de Buenos Aires, by which this had decided to early terminate the arbitral proceedings.

The Court’s grounds for its decision were:

“The arbitral jurisdiction derives from the will of the parties, who can waive the jurisdiction of State courts and submit themselves to the former. In this manner, the parties are able to avoid the jurisdiction of State agencies and even restrict the control of the award, by waiving certain ways to challenge it, such as the appeal (as decided by this Chamber in case «PMA S.A. c. Ciffoni, Ricardo; Donati, Silvia y Dupre, Graciana» dated 11/07/03).

In these circumstances, in principle, all decisions related to the arbitral proceedings – as the resolution that early terminates the arbitral procedure – fall exclusively under the arbitrators’ jurisdiction and cannot be reviewed by State courts.

Thus, the intervention of State courts is exceptional and it would only be possible in the case of an arbitration clause providing for it or an express regulatory authorization. None of these two scenarios appear in this case. On the contrary, the parties have expressly waived the challenge of the final award and ‘…any legal issue that may arise regarding the arbitration…’ (arbitration clause transcribed by the defendant on page 4 of the proceedings).

(…) Therefore, as the intervention of this Court is limited and exceptional, as previously mentioned, its jurisdiction may not be extended beyond what has specifically been agreed upon and what is regulated.”[1]

In this case, the Court of Appeal has strictly applied the so called principle of autonomy of arbitration, according to which the State’s intervention during the arbitration procedure is exceptional, being limited to assistance and cooperation.[2]

Moreover, it should be noted that this principle privileging the primacy and the respect of the autonomy of the parties’ will, and therefore, of the choice of law (v.gr., ICC[3], LCIA[4] or AAA[5] Rules), was clearly included in the UNCITRAL Model Law on International Commercial Arbitration of 1985, which establishes:

“Extent of Court Intervention. In matters governed by this Law, no court shall intervene except where so provided in this Law”.[6]

This has also been the criterion adopted by most modern legislations, such as the English Arbitration Act of 1996, the German Law of 1998, the Swiss Federal Law on International Private Law of 1987, the Swedish Law of 1999 and the new Spanish Law of 2003.[7]

Additionally in 1987, French courts – whose early procedural legislation on arbitration constituted the regulatory source of most Latin American countries’ regulations[8]- outlined a position that has since then been followed, based on the respect for the above mentioned principle of the autonomy of the arbitral procedure. Such principle was clearly established in an award of the Court of Appeals of Paris:

“…the arbitrators’ exercise of their own prerogatives deriving from their jurisdictional powers, which are legitimate and autonomous, must be guaranteed in a completely independent manner, ast corresponds to any judge … without any State court intervention”[9].

In this sense, and in reference to the relationship between State courts and arbitral tribunals, it is important to emphasize the need for that relationship to be complementary, reflecting both the respect for the parties’ agreement and the tribunal’s powers. During most of the last century and the beginning of this century, this has been one of the essential ways to provide legal certainty and neutrality, both crucial for business promotion in the international community.

The complementary relationship previously mentioned – necessary for the development of arbitration, especially in the international field – implies, for its parties, the existence of supplementary roles, and suggests a certain equality in the performance of such roles, as well as a collaboration that replaces competition or even the rivalry that could have existed.[10] This has lead some authors to sustain that the relationship between State courts and arbitral tribunals is similar to that between two partners,[11] although it could not be maintained that it is the case of a partnership between equals,[12] since the arbitration will eventually require the support and intervention of judges.[13]

Presently, and as an example of the above mentioned “partnership relation”, it has also been said that each of the “partners” (arbitrators and judges) should play a different role at different moments. Hence, at the first stages (i.e., before the arbitral tribunal has been constituted), the responsibility should be borne by the judges as, if a party intended to bring the dispute to a State court, they should avoid any breach of the arbitration agreement. Later on, when the arbitral tribunal has already been constituted, this has to continue until the issuance of the award. Afterwards, when the arbitrators have already fulfilled their assignment, they must be replaced by the State courts in order for these to exercise their powers for the enforcement of the award, if the defeated party refused to comply with it.[14]