International Arbitration, Quo Vadis? (arbitration and Mind Pandemics)

• Publication year: 2021
• Citation: Vol. 49 No. 1

International Arbitration, Quo Vadis? (Arbitration and Mind Pandemics)

Horacio A. Grigera Naón^*

Table of Contents

I. Pandemics in Historical Perspective: the Pandemics of the Mind..................................................................... 84

II. Are There Mind Pandemics Affecting International Arbitration?................................................ 85

III. Closing Thoughts......................................................... 92

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I. Pandemics in Historical Perspective: the Pandemics of the Mind

Where is international arbitration going, quo vadis? Since this is a question in Latin, let's start with some Roman history.

Procopius (500 AD/ (†) circa 562 AD) was a legal advisor to Belisarius, a general of Emperor Justinian, who reigned over the Eastern Roman Empire.¹ He also was a prominent historian who, in parallel to writing the official history of the Empire, wrote what he called The Secret History, a chronicle not for the eyes of the Emperor or his entourage. In this book, Procopius describes the greed and cruelty of Justinian and the dissolute life of his wife, Theodora, and others close to ruling circles in Byzantium (after Constantinople and now Istanbul), the then Eastern Roman Empire capital.²

Procopius's book is not limited to describing the autocratic rule of Justinian (who reigned between 527 and 562 AD) and the moral decadence of those close to him, but also refers to the murderous pandemic that ravaged his empire in 541-542 AD.³ This pandemic, probably a forerunner of the Black Death in the Middle Ages, accounted for perhaps millions of deaths, exterminated around forty percent of Byzantium's population, and had successive comebacks until approximately 700 AD.⁴ The terrible plague did not spare anyone, irrespective of rank or wealth, and decimated the Roman legions protecting Byzantium and the Empire.⁵

Recently, it has been persuasively argued that the pandemic was the decisive blow sounding the death knell to Byzantium and the Eastern Roman Empire, or at least precipitated their demise, since it destroyed the Empire's economy, sowed death and despair in its population, and left its frontiers exposed to the onslaught of foreign enemies anxious to plunder Byzantium's riches.⁶

However, Justinian is better remembered not for his corruption and autocratic rule, but by his compilation of Roman law through the Corpus Iuris Civilis,⁷ preserving the glorious legacy of Roman jurists for posterity despite the autocratic influence of Justinian in the compilation to assert his monopoly on law-making

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and legal interpretation.⁸ Nevertheless, the influence of Justinian's Corpus in both the common law and continental law systems is still noticeable today.

Thus, the pandemic that destroyed lives and wealth could not annihilate the activity of the mind in the elaboration of the rule of law; nor the patient and conscientious work of Justinian's jurists under the leadership of Tribonian⁹ and their lasting contributions to the progress and development of the law.

Nevertheless, the operation of the mind is not always immune to a different type of pandemic. Pandemics are not only a menace to the lives of human beings, empires, or economic systems; but also, more difficult to grasp in the aggregate of their negative impacts, pandemics perversely influence human conduct, thus endangering cultural and ethical values on which human civilized existence is based. It is the mind that primarily suffers from this latter type of pandemic. Its virus easily propagates itself when human ideas and ensuing conduct are vitiated by irrational impulses or sheer ignorance.

History—be it the history of pandemics destroying human life or the history of pandemics of the mind undermining the basis of human civilized existence—again and again proves that failure to cauterize pandemics early leads to disaster and unimaginable human suffering.

The rule of law—a cultural creation fashioning human conduct—is not free from the risks of this second type of pandemic.

II. Are There Mind Pandemics Affecting International Arbitration?

Against this backdrop, if we turn now our eyes to the field of international arbitration, we shall see that different and qualified voices have sent alarm signals by pointing to certain relatively recent and unfavorable developments concerning its role and operation.

We cannot so far equate the facts prompting such developments with a pandemic or perhaps even with a disease, but it would be reckless to ignore them nor not to send warning signals before the virus becomes widespread or out of control.

For example, Judge James Crawford draws attention to certain aspects of investment dispute resolution mechanisms reflecting policies originated in the European Union, which may conspire against the neutrality or diverse cultural and

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expert background expected from adjudicators deciding investment disputes.¹⁰ Judge Crawford centers his analysis in part on provisions of the Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union.¹¹

According to CETA Article 8.27, the decision of investment disputes is entrusted to a permanent tribunal composed of fifteen members elected for five-year terms renewable once (five Canadian nationals, five nationals from EU countries, and five from third countries).¹² All tribunal members are appointed by the CETA Joint Committee, the members of which are in turn appointed pursuant to CETA Article 26.1 by the CETA member States.¹³

Pursuant to CETA Article 8.28,¹⁴ all members of CETA's Appellate Tribunal are also appointed by the CETA Joint Committee.¹⁵ Crawford points out that the fact that these tribunals shall only be composed of State-appointed individuals may compromise their independence.¹⁶

Also, sociologically speaking, State-appointed persons to investment tribunals are often present or former government lawyers, prominent present or former State counsel or judges, which might conspire not only against the neutrality of decision makers but also against legal knowledge diversity needed for the resolution of investment cases. Investment disputes require not only individuals—not infrequently coming from academia—well-versed in public international law

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but also practitioners with expertise in commercial and economic legal issues as well as procedural case management skills. However, the requirement under Article 8.27 (4) of CETA, privileging the composition of CETA tribunals with public international law experts, would exclude arbitrators with experience in commercial arbitration and public law.¹⁷ In investment cases, the cross-fertilization of international, general business, and commercial law experience and case management skills positively contributes to the quality and evenhandedness of the dispute resolution process and its outcome.¹⁸ As summarized by Crawford, "Investor-State arbitration is a relatively new phenomenon and, like all goods and services, it benefits from a free market of competing ideas. The investment court proposal risks marginalizing valuable ideas from different systems of law."¹⁹

Crawford also criticizes CETA Article 8.31 (3),²⁰ allowing the States to recommend agreed interpretations of CETA provisions binding on CETA tribunals even in respect of ongoing cases. He points out the risk that CETA Tribunal members will prefer legal principles familiar or favorable to States, which may also conspire against impartiality safeguards, like disclosure requirements, found in every set of arbitration procedural rules.²¹

By addressing issues similar to some of those raised by Crawford, Charles Brower and Jawad Ahmad have also voiced concerns in a recent article about the politicization of the appointment process under State influence for these tribunals and mention it as an example of State efforts to "repossess" investor-state arbitration.²²

Further, considering Crawford's remarks concerning CETA, one wonders if decisions of these tribunals may qualify as arbitral awards that are enforceable, for example, under legal regimes such as the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention).²³ However, CETA Article 8.41 (5)²⁴ provides that these tribunals' awards

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fulfill such Convention's Article 1 requirement regarding commerciality of the transaction giving rise to the dispute.²⁵ It seems that the very drafters of CETA were aware of this issue, since CETA Article 8.41 (4) provides that "[e]xecution of the award shall be governed by the laws concerning the execution of judgments or awards in force where the execution is sought."²⁶

According to this Article, if not "awards," these tribunals' decisions may still qualify as court judgments in national enforcement jurisdictions, i.e. in scenarios in which the New York Convention, exclusively dealing with arbitral awards, does not apply.²⁷ Thus, if in doubt about the "commerciality" of CETA awards, they could still be enforced as judgments.

Be that as it may, CETA Article 8.41 (4) highlights the ambiguous nature of the determinations of these tribunals. Since international arbitration is indisputably based on the free selection of the members of the arbitral tribunal by the parties, and that such a fundamental right in arbitration is denied to the private investor under the CETA regime, it becomes more than doubtful that awards of these tribunals may be characterized as arbitral awards qualifying as such, inter alia, under the New York Convention, irrespective of whether the subject-matter of investment disputes are characterized as commercial. Is it possible to rule that an award or sentence is an arbitral award by an arbitrary command or ukase when the very constitution of the tribunal at stake is inimical to the most fundamental notions defining what arbitration is?

In any event, CETA tribunals are a hybrid creation which, at the end of the day, is closer to a judicial...