Does International Arbitration Need a Mandatory Rules Method?

The role of mandatory rules in international arbitration remains a persistent source of debate. The basic problem is a straightforward one: contractual arbitration arises as a matter of the parties’ consent, but the resolution of contractual disputes can implicate mandatory rules of law that are not waivable and are typically designed to protect broader public rights. The literature has often presented the issue in terms of conflict between the authority of the state and the party-derived authority of the arbitrator. Asserting an independent public duty to protect national mandatory laws as well as the enforceability of arbitral awards, some writers have urged arbitrators to apply a so-called “mandatory rules method” to determine, irrespective of the parties’ agreement, which particular mandatory rules to apply in a particular dispute. This Article takes a skeptical view of the mandatory rules literature and argues that arbitration of mandatory rules is readily handled within the standard, contractual view of arbitration. Advocates of the mandatory rules method rely on a mistaken view of national arbitrability doctrines that, once corrected, deprives the argument of much of its force. The consequences of this insight are nevertheless limited because modern arbitration agreements generally give arbitrators far more authority to apply mandatory rules than many assume. Indeed, applying a special mandatory rules method will typically narrow rather than expand the range of mandatory rules available to the arbitrator. There may be reasons why that narrowing is prudent, but those are not reasons the existing literature has thus far discussed