PUBLIC POLICY NORMS AND CHOICE-OF-LAW METHODOLOGY ADJUSTMENTS IN INTERNATIONAL ARBITRATION

Arbitration agreements draw the legal relationship not only between the parties but also are the contractual source of authority for arbitrators to resolve parties’ dispute. To respect the principle of party autonomy, arbitrators must serve parties’ will and consider their interests in issuing the arbitral award. However, there is one caveat: respect public policy norms of the states that have an important stake in the outcome of the arbitration. Indeed, application of public policy norms in international arbitration is a challenge due to their mandatory character. The law chosen by the parties, or the otherwise applicable law chosen by the tribunal is where the first and foremost public policy norms must be applied and respected. The limitations would be overriding public policy norms of the place of arbitration on the issue of arbitrability and such procedural norms of the place of arbitration over the procedural aspect of the arbitration. Another overriding public policy norms possibly involved (that may override parties’ choice of law) are those of the foreign states to the chosen law and to the Lex arbitri, which have a close connection to the case, such as places of enforcement of the award and performance of the transaction. This Article suggests that in addition to the traditional conflicts methods of determining the applicable law, arbitrators could make adjustments in approaching public policy norms in arbitration. Arbitrators do not have to necessarily reject application of public policy norms, in particular ones with an overriding character or directly applicable in disputes. Possibly, they have the option to apply the applicable norm to particular issues in the dispute (dépeçage) or award and respect party autonomy in all other aspects of the case. This may be done ex officio or through mediation within the arbitration process conducted by the same arbitrator most familiar with the dispute, with active participation of the parties