KluwerArbitration

Document information Chapter 4 Essential Characteristics of International

Commercial Arbitration
Publication
4-1 The characteristics of arbitration discussed above equally apply to all types of
Comparative International arbitration, irrespective of subject matter and whether or not domestic or international.
Commercial Arbitration This chapter is concerned with what makes an arbitration (1) commercial (2) international
(1) , and (3) the debate on transnational and delocalised arbitration.
P 50
Bibliographic reference
'Chapter 4 Essential 1 The Meaning of “Commercial”
Characteristics of
International Commercial 1.1 Importance of the Definition of “Commercial”
Arbitration', in Julian David
Mathew Lew , Loukas A. 4-2 While the term “commercial” or “economic” (2) adds little to the description of
Mistelis , et al., “international arbitration” it has become the accepted term due to its consistent use by
Comparative International lawyers from civil law countries. (3) The term “economic” is generally considered to be
Commercial Arbitration, wider than the term “commercial”. (4) The addition of “economic” adds little to the scope
(© Kluwer Law of arbitration, but it can also be misleading. As the term “international economic law” has
International; Kluwer Law specific connotations (5) , the traditional and established term “international
International 2003) pp. 49 - commercial arbitration” is preferred. The qualification “commercial” is used in the
69 broadest sense and is not without consequences.
4-3 Historically, the unqualified term “international arbitration” has been used for public
international law arbitration with the participation of one or more states. Public
international law arbitrations, due to state participation and state sovereignty
implications, are often subject to different rules. Arbitrations involving investments by
parties from one country in another and disputes concerning energy-related issues
frequently involve international law issues. While these types of arbitration possess
characteristics of both commercial and public international arbitration, in recent years
the commercial arbitration elements have outweighed the public international law
arbitration elements. Also, disputes which are labelled by American lawyers as trade
disputes in the context of the WTO (6) or NAFTA (7) and related to public law regulation of
trade qualify as commercial disputes.
P 51
4-4 It may be important to label an arbitration as “commercial” because commercial law
is often subject to a distinct set of flexible rules. For instance, disputes involving
consumers may be subject to stricter consumer protection rules (8) concerning the
negotiation, formation and validity of an arbitration agreement. While the added
protection may be justified in consumer transactions, with the rationale of protecting the
allegedly weaker party, it is in most cases unjustified and unwelcome in commercial
transactions.
4-5 It may be difficult to define a commercial dispute, as many jurisdictions have their
own definition of commercial law and commercial disputes. Some disputes are deemed
commercial due to the fact that commercial persons are involved (9) whereas other
disputes are deemed commercial irrespective of the persons involved. (10) In
international commercial arbitration, it is important to characterise the nature of the
underlying transaction and whether or not the relevant dispute is commercial; the
involvement of commercial persons may be of relevance but should not be the guiding
principle. For instance, states, their ministries and agencies may be involved in a
commercial activity although they do not qualify, strictly speaking, as a commercial
person.
4-6 Most civil law countries will have a commercial law code. Commercial law has
developed on the basis of special legislation, scholarly commentaries and relevant case
law. While it may be argued that in civil law countries it may not always be clear what is
commercial, local lawyers can easily identify a commercial transaction. Similarly, in
common law jurisdictions where distinctions between the various areas of law are less
formal, it is possible to identify commercial transactions. In the US the Uniform
P 52 Commercial Code delimits a non-exclusive set of commercial transactions. (11) In
England delimitation of commercial law can be found in legislation, in scholarly writings
(12) , and in the Civil Procedure Rules which set out the jurisdiction of the Commercial
Court with respect to commercial disputes. (13)
4-7 This book uses an autonomous concept of commercial transactions closely following
the Model Law. It includes disputes with state parties and does not distinguish between
civil and commercial arbitration as in some national legal systems. (14)

1.2 “Commercial” in the UNCITRAL Model Law and Model Law Countries

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 4-8 The Model Law describes “commercial” in a footnote
The term “commercial” should be given a wide interpretation so as to cover
matters arising from all relationships of a commercial nature, whether
contractual or not. Relationships of a commercial nature include, but are not
limited to, the following transactions: any trade transaction for the supply or
exchange of goods or services; distribution agreement; commercial
representation or agency; factoring; leasing; construction of works; consulting;
engineering; licensing; investment; financing; banking; insurance; exploitation
agreement or concession; joint venture and other forms of industrial or
business co-operation; carriage of goods or passengers by air, sea, rail or road.
4-9 Despite its presence in a footnote, this definition is an integral part of the Model Law.
The drafters of the Model Law wanted to produce an inclusive and open-ended
description of the term commercial. The intention was to have a definition which can be
used, in particular, by states which do not have a distinctive body of commercial law so
that the Model Law would be applicable to all aspects of international business.
P 53
4-10 Some countries which adopted the Model Law incorporated the text of the footnote
into a section of the law; (15) other jurisdictions simply reproduced the text in a schedule.
(16) India has opted for an expressly Indian characterisation of commercial disputes (17)
while other countries have for various reasons not included the definition when adopting
the Model Law. (18)
4-11 The decision of the drafters of the Model Law to include an open-ended definition of
“commercial” is well justified, especially when read together with reference to
international proceedings. The intention is to have a scope of application which is
flexible enough to meet the needs of the international business community and which
will facilitate the widest possible application of the Model Law. The drafters managed to
avoid doctrinal traps and to focus on the nature of the transaction rather than the
persons involved. (19)
P 54

1.3 “Commercial” in National Legislation

4-12 While a number of jurisdictions, which have not enacted the Model Law, make
references to commercial arbitration or commercial transactions (20) , almost none
appears to define “commercial” in the context of arbitration. This silence is often
deemed an implied reference to the concept of commercial law and commercial
transactions as developed in the national (domestic) law.
4-13 The 1925 US Federal Arbitration Act definition is much narrower than that of the
Model Law and is now outdated. It sees international commerce as a maritime and
shipping transaction and the word “commerce” adds only the international character of
the transaction or the legal relationship; “commerce” appears almost synonymous to
“cross-border.” Section 1 FAA provides
“COMMERCE” DEFINED; EXCEPTIONS TO OPERATION OF TITLE
“Maritime transaction”, as herein defined, means charter parties, bills of
lading of water carriers, agreements relating to wharfage, supplies furnished
vessels or repairs to vessels, collisions, or any other matters in foreign
commerce which, if the subject of controversy, would be embraced within
admiralty jurisdiction; “commerce”, as herein defined, means commerce
among the several States or with foreign nations, or in any Territory of the
United States or in the District of Columbia, or between any such Territory and
another, or between any such Territory and any State or foreign nation, or
between the District of Columbia and any State or Territory or foreign nation,
but nothing herein contained shall apply to contracts of employment of
seamen, railroad employees, or any other class of workers engaged in foreign
or interstate commerce.

1.4 “Commercial” in Arbitration Rules

4-14 Few arbitration rules define commercial disputes or commercial transactions. The
rationale behind this decision is the intention to make it possible to accept any dispute
that the parties wish to submit to the arbitration institution. Definitions of “commercial”
can be found in Article 2 CIETAC Rules. Commercial disputes that can be resolved by
arbitration under the 2001 CIETAC Rules Article 2 include disputes between an enterprise
with foreign investment and another Chinese legal or physical person, or economic
P 55 organisation or arising from project financing, invitation to tender, bidding,
construction and other activities conducted by Chinese legal or physical persons and/or
other economic organisations through utilising the capital, technology or service from
foreign countries, international organisations or from the Honk Kong SAR, Macao and
Taiwan regions. (21) The Rules attempt to combine “international” with “commercial” and
to provide for the maximum scope of application. In most cases international is used as

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 synonymous for commercial.

1.5 “Commercial” in International Conventions

4-15 International arbitration conventions also refer to the commercial nature of
transactions. They do not necessarily limit their scope to commercial disputes. Most of
them, however, operate only for commercial transactions.
4-16 The New York Convention allows for a distinction to be made between commercial
and non-commercial arbitration. This is reflected in Article 1(3), which contains what is
known as the commercial reservation
When signing, ratifying or acceding to this Convention …, any State may …
declare that it will apply the Convention only to differences arising out of legal
relationships, whether contractual or not, which are considered as commercial
under the national law of the State making such declaration.
4-17 The commercial reservation was inserted because at the New York Conference of
1958 it was believed that, without this clause, it would be impossible for certain civil law
countries, which distinguish between commercial and non-commercial transactions, to
adhere to the Convention. About one third of the contracting states have made use of this
commercial reservation.
4-18 The New York Convention suggests that “commercial” should be characterised on the
P 56 basis of national law. In practice, national courts tend to interpret the scope of
“commercial” broadly. However there is some Indian case law which interprets the term
“commercial” narrowly by holding that it means “commercial under a provision of Indian
law in force.” Accordingly Indian courts have held that neither the construction of a
factory accompanied with transfer of technology (22) nor a contract of technical know-
how to be of commercial nature. (23) Similarly, the Tunisian Cour de cassation refused to
consider as commercial a contract concerning a town-planning programme drawn by
architects. (24)
4-19 The more liberal approach can be seen in the US which excludes from the scope of
the New York Convention only matters arising out of legal relationships, whether
contractual or not, which are not considered as commercial under the national law of the
US. (25) International employment contracts have been considered to be a commercial
legal relationship. (26)
4-20 Due to the uncertainty that the commercial reservation may create, France, which
originally expressed a reservation, has withdrawn its commercial reservation. It is
expected that other countries may follow.
4-21 The European Convention on International Commercial Arbitration did not contain a
specific definition of commercial. It adopted a general definition with a reference in
Article I(1)(a)
to arbitration agreements concluded for the purpose of settling disputes
arising from international trade.
4-22 In a case related to this provision of the European Convention, an arbitration
P 57 tribunal held that the term has to be effected independently of notions of domestic
law and that economic contracts concluded by a state may fall under the Convention
definition. (27)
4-23 The 1987 Amman Arab Convention on Commercial Arbitration also contains no clear
definition of commercial transactions. Article 2 provides only that the Convention will
apply
… to commercial disputes between natural or legal persons of any nationality,
linked by commercial transactions with one of the contracting States or one of
its nationals, or which have their main headquarters in one of these States.
4-24 To the extent that most Arab states have harmonised commercial and civil law
practices, the absence of a definition should not normally create any problems.
4-25 Similarly, the Inter-American Convention on International Commercial Arbitration
(28) states in Article 1
An agreement in which the parties undertake to submit to arbitral decision
any differences that may arise or have arisen between them with respect to a
commercial transaction is valid. …
4-26 When the ambit of a “commercial transaction” is to be ascertained, regard should
be given to the international character of a convention and the need to promote
uniformity. Accordingly, only an autonomous and comparative interpretation and
characterisation is appropriate.

2 The Meaning of “International”

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 4-27 The international or domestic character of commercial arbitration may result in the
application of a different set of rules. Several legal systems have special rules for
domestic and international arbitration. (29) Other systems opt for a unified regulation.
P 58 (30) What makes arbitration an international one? What are the criteria employed for
such a classification? The international or domestic character of commercial arbitration
is not to be confused with the domestic or foreign character of awards for which different
regimes for their enforcement exist.

2.1 Relevant Criteria

4-28 There are three ways of establishing the international character of an arbitration. An
arbitration may be international because (a) its subject matter or its procedure (31) or its
organisation is international; or (b) the parties involved are connected with different
jurisdictions; or (c) there is a combination of both.
a The objective criterion: Dispute with foreign element or of international character
4-29 The objective criterion focuses on the subject matter of the dispute and the
international or national character of the underlying transaction. Hence, the
international commercial interests, or the cross-border element of the underlying
contract, or the fact that the dispute is referred to a genuinely international arbitration
institution, such as the ICC, the LCIA or ICSID, would be sufficient for the arbitration to
qualify as international.
4-30 The objective criterion is found most simply in French law. Article 1492 of the French
Code of Civil Procedure reads
An arbitration is international if it implicates international commercial
interests. (32)
4-31 There is a significant body of French case law relating to the concept of international
P 59 transaction. (33) The French courts have taken a liberal approach in order to delimit
the purely economic definition of international arbitration: an arbitration is international
if it results from a dispute involving the economies of more than one country. More
specifically it was held by the Paris Court of Appeal that
the international nature of an arbitration must be determined according to
the economic reality of the process during which it arises. In this respect, all
that is required is that the economic transaction should entail a transfer of
goods, services or funds across national boundaries, while the nationality of
the parties, the law applicable to the contract or the arbitration, and the
place of arbitration are irrelevant. (34)
4-32 The approach of the French courts has been consistent and has effectively promoted
international commercial arbitration. The Romanian Code of Civil Procedure takes a
more classical conflict of laws approach in Article 369
… an arbitration taking place in Romania shall be considered international if
it has arisen out of a private law relation having a foreign element.
4-33 An inherent drawback relates to the definition of “international commercial
interests” while the term “foreign element” seems to be less problematic and is
adequately wide.
b The subjective criterion: Diversity of nationality/place of business of parties
4-34 According to the subjective criterion the focus is on the different nationality or
domicile or place of business of the parties to the arbitration agreement. It follows that
parties, individuals or companies, should come from different jurisdictions. The
subjective criterion was employed by previous English arbitration laws. (35) It is currently
P 60 applied in Article 176(1) of the Swiss Private International Law Act

The provisions of this chapter shall apply to any arbitration if the seat of the
arbitral tribunal is in Switzerland and if, at the time when the arbitration
agreement was concluded, at least one of the parties had neither its domicile
nor its habitual residence in Switzerland.
4-35 The subjective criterion may significantly restrict the scope of international
arbitration. (36) An illustration of the potential pitfall can be seen in the example of a
distributorship agreement. Two companies from the same country enter into a
distributorship agreement according to which, one of them receives world-wide
distributorship rights of the other company's products. Disputes arising out of such an
agreement would be domestic under Swiss law if both companies have their seat in
Switzerland. (37) In contrast such a dispute is international under French law. (38)
c The modern combined criterion: The Model Law approach and other national legal
systems
4-36 A third approach combines both the subjective and objective criteria. The new

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 tendency towards a combined criterion can be found in the Model Law. According to
Article 1(3)
An arbitration is international if:
a. the parties to an arbitration agreement have, at the time of the
conclusion of that agreement, their places of business in different States;
or
b. one of the following places is situated outside the State in which the
parties have their places of business:
(i) the place of arbitration if determined in, or pursuant to, the
arbitration agreement
(ii) any place where a substantial part of the obligations of the
commercial relationship is to be performed or the place with which
the subject-matter of the dispute is most closely connected; or
c. the parties have expressly agreed that the subject-matter of the
arbitration agreement relates to more than one country.
P 61
4-37 The Model Law creates a flexible and effective system for the determination of the
international character of arbitration. Its approach consists of alternative criteria and
also includes a conflict of laws rule for the connection of legal entities with a particular
legal system. (39) Article 1(3)(c) has been criticised as too broad as it allows the parties to
a dispute to internationalise it without apparent reason or any foreign link. Accordingly,
some countries (40) when adopting the Model Law omitted this final case of
internationality. Other countries have added as a default criterion the French approach.
(41) While yet other countries, such as Hong Kong, (42) offer the parties to arbitration the
option of submitting their dispute to domestic or international arbitration law.
4-38 Another successful merger of the subjective with the objective criteria (43) can be
found in the 1994 reform of Article 832 Italian Code of Civil Procedure
If at the date of signing the arbitration clause or submission to arbitration at
least one of the parties has its domicile (residenza) or principal place of
business (sede effettiva) abroad, or if a substantial part (parte rilevante) of the
obligations arising out of the relationship to which the dispute refers must be
performed abroad, the provisions of Chapters I to V of this Title shall apply to
arbitration in so far as they are not derogated from by this Chapter.
The provisions of international treaties shall in any case be applicable.
4-39 Section 202 US Federal Arbitration Act gives the definition of the arbitration
agreement or arbitration award falling under the New York Convention. While the
P 62 nationality test is used for the purposes of the New York Convention, (44) the case law
of the US Supreme Court introduces objective criteria. (45) This cohabitation functions
effectively.

2.2 Nationality of Arbitration: “International” Arbitration in International

Conventions
4-40 Only the European Convention attempts a definition of an international arbitration
when it is setting out its scope of application. In Article I(1)(a) it states
1. This Convention shall apply:
(a) to arbitration agreements concluded for the purpose of settling disputes
arising from international trade between physical or legal persons having,
when concluding the agreement, their habitual place of residence or their seat
in different Contracting States;…
4-41 Both the objective (a “dispute arising from international trade” and the subjective
criteria (“between … persons … in different contracting States”) are present. They are to
be applied cumulatively. Unfortunately, the second criterion may prevent some
arbitrations which are international (in respect of subject matter) from falling within the
scope of the Convention.
4-42 The New York Convention confines its application to foreign awards, but makes no
attempt to provide a definition of international arbitration.
4-43 The rapid development of international commercial arbitration has forced national
legal systems not only to tolerate international commercial arbitration, but also to
provide for favourable, legal regimes within which it can flourish. It has been rightly
suggested that in the 1980s and the 1990s we have experienced a period of competition
amongst legislators and judiciary; they all tried to attract more international
arbitrations. (46)
4-44 The two main effects of this competition were the modernization and liberalization
P 63 of arbitration regimes and the transfer of the favourable treatment of international

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 arbitration onto the domestic level. (47) This was also reflected in the new trend for
unified regulation of international and domestic arbitrations. (48) The Dutch legislator
opted for a unified system with the argument “what is good for international arbitration is
also good for domestic arbitration.” (49) The same approach to a single arbitration act
was taken in Sweden, Germany and other countries. In England, although different
systems were anticipated in the Arbitration Act, the domestic rules were not put into
effect. (50) The modern unified arbitration systems minimise the importance of the
distinction of the national and international arbitration.
4-45 An undisputed significant role towards unification and internationalisation of
international commercial arbitration is ascribed to the success of the Model Law. It
appears that a unified regulatory model, which is often referred to as monism, is the
emerging trend. (51) The internationalisation of international arbitration appears to be
P 64 well established and welcome. (52) There is an element of the doctrinal monism-
dualism debate, as well as the apparent internationalisation of international commercial
arbitration, which should be recognised from the outset: there is a gradual convergence
of national arbitration systems, greatly enhanced by modern arbitration laws, the revised
international and institutional arbitration rules and the increased acceptance of party
autonomy, which can be found in the vast majority of international commercial contracts.

3 Transnational and Delocalised Arbitration

4-46 It follows from the nationality of arbitration discussion that even international
arbitration normally operates within the constraints of a national legal system. However,
it should not be the case that an arbitration is national because of the applicable legal
regime. Rather, the applicable legal regime should be the consequence of the fact that
the arbitration is international. Some legal systems may not have a developed concept of
international arbitration and therefore only distinguish between national and foreign
arbitration.
4-47 The nationality of arbitration retains an important role to the extent that the place
of arbitration is of significance. For instance, a number of laws provide that a country's
procedural rules apply automatically to an arbitration held on its territory subject to the
express will of the parties and the rules selected to govern the arbitration. (53) Other
jurisdictions follow this position but adopt a different set of rules for international
arbitrations. (54)
4-48 However, the importance of the seat of arbitration has been challenged on several
grounds. In particular
• The choice of seat is often a matter of convenience;
• The choice of seat is often determined not by the parties but by the arbitration
institution they have selected;
• The choice of seat is often governed by the desire for neutrality;
• The role of the arbitration tribunal is transitory and the seat has no necessary
connection with the dispute. (55)
P 65
4-49 In light of the emancipation of arbitration from national laws and the above
arguments there is a school of thought that international arbitration can be delocalised.
Delocalised arbitration is detached completely from the law of the place of arbitration to
the extent that there is no need for support by local courts, e.g., for enforcement
purposes. (56) In support of arbitration proceedings detached from national law, it is
argued that “it is both pointless and misleading to create a link between the arbitrator
and some national law just in case … one of the parties wishes to resort to the courts.” (57)
Also, in support of detached proceedings is the international business community that
has successfully carried on arbitration proceedings detached from national legal
systems. (58)
4-50 There are a number of illustrations of this trend. For example, parties may choose
procedural law other than the law of the seat of arbitration. (59) Further a tribunal may
decide not to follow any particular national law but to conduct the proceedings under
general principles of procedure. This could be expressed in the UNCITRAL Rules or the
UNCITRAL Notes on Organising Arbitral Proceedings or international rules prepared by
one of the international institutions, such as the ICC or the IBA. In most cases the
application of national arbitration law is unnecessary. A tribunal may conduct
proceedings in accordance with the arbitration agreement on general rules or, if one of
the parties is a sovereign state, the arbitration tribunal may also have the option of
conducting the proceedings based on principles of public international law. In such
cases, it is suggested that the tribunal could render an award unattached to any legal
system, making it a so-called floating award. (60)
4-51 Additional support for delocalisation is drawn from a series of cases (61) in which
P 66 French or other courts held that setting aside or suspension of an award by a court at
the place of arbitration did not deprive the party obtaining the award of its right to
enforce it in France. The French decisions relied on the fact that French law does not
contain the restriction of Article V(1)(e) New York Convention. (62)

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 4-52 Sports arbitration, in particular in the context of Olympic games, is another
example of delocalised arbitration. The International Olympic Committee Tribunal for
Sports has a “fictional” place of arbitration in Lausanne, Switzerland, irrespective of the
actual place of arbitration, in Athens, Sydney or Nagano. (63)
4-53 Further, the emerging electronic online arbitration, including fully online arbitration
as well as asynchronous offline arbitration with use of electronic media, (64) may be
delocalised. In such arbitrations there are no physical hearings; the tribunals may have
no physical or legal seat. Consequently, the creation of new substantive rules has been
suggested since it has been considered problematic to link online arbitration with a
particular legal system. (65) An alternative to further regulation is the wider acceptance
of party autonomy or the acceptance of delocalised and denationalised arbitration.
P 67
4-54 The main argument against delocalised arbitration is that arbitration cannot
operate in a legal vacuum. At the very least, ultimately, the parties will expect the law to
recognise and give effect to the tribunal's award. There are other areas where the support
of the courts may be needed, e.g., to uphold and enforce the agreement to arbitrate, to
appoint or remove arbitrators, and for interim relief in support of the arbitration process.
National courts are always asked to support or intervene for these purposes. This is why
arbitration cannot be fully delocalised from the national law. (66)
4-55 In fact, delocalised arbitration is not an extra-legal arbitration; it is a self-
regulatory arbitration. Delocalisation relates usually to the arbitration process or to the
award. While the emancipation from the procedural law of the place of arbitration is now
accepted, the enforcement of delocalised awards appears to be problematic; ultimately,
the enforcement is controlled by national courts. However, at least French and US courts
(67) have enforced delocalised awards. (68) Belgium (69) and Switzerland have given
foreign parties the option to contract out of any judicial review in limited circumstances.
(70)
4-56 Another widely used expression relates to transnational (71) or a-national
arbitration. Transnational arbitration law has been described as
a theoretical ideal which posits that international arbitration, at least as
regards certain types of arbitral institution arbitration, is a self-contained
judicial system, by its very nature separate from national systems of law, and
P 68 indeed antithetical to them. If the ideal is fully realised national courts will
not feature in the law and practice of international arbitration at all.
4-57 As major international contracts are often very long and regulatory, and to the
extent that a number of disputes can be resolved with extra-legal standards, a-national
arbitration (72) with full self-regulation has found acceptance. (73) Transnational and a-
national arbitration denotes also the application of lex mercatoria or transnational
commercial law. There are a significant number of arbitration awards which apply or
make references to the rules of transnational commercial law. It has also been suggested
that international commercial arbitration is autonomous. Due to the involvement of
international law firms and a number of distinguished arbitrators, one can now speak of
the construction of a transnational legal order relating to the settlement of international
commercial disputes. (74)
4-58 One obstacle to the development of denationalised arbitration, however, is lack of
uniformity in national arbitration rules. This difficulty might be overcome by an
international convention which ensures that proceedings conducted outside the national
legal system will be recognised and floating awards will be enforced. In the interim it
suffices if international conventions or national laws confirm the parties' right to choose
the law that governs the arbitration. The European and ICSID Conventions provide
implicitly for the recognition and enforcement of floating awards, but the case may be
complicated under the New York Convention. However, while the New York Convention
focuses on the place where the award was rendered (a functional equivalent of the place
of arbitration), a choice of law by the parties in favour of a foreign law to govern the
arbitration will remedy the problem sufficiently.
4-59 It is, however, possible that the whole doctrine of denationalised awards and
proceedings will eventually become redundant as a result of increased and indirect
unification of arbitration procedural law achieved through the emergence of the Model
P 69 Law. (75) Delocalisation can only function provided that quasi autonomous
international procedural rules emerge. (76) This is limited delocalisation and covers the
aspect of delocalisation where there is no need to rely on local courts and where parties
voluntarily enforce the awards. While proceedings can effectively be delocalised, awards
P 69 normally acquire a nationality at the time of enforcement.

References

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 1) Domestic arbitration is regulated in almost every legal system. Some countries
additionally have specific legislation relating to particular types of arbitration
disputes, e.g. employment, securities, maritime or they may require disputes of a
certain kind to be resolved exclusively by arbitration. For examples of statutory
arbitration or arbitrage forcé, see Bermuda, Arbitration Act (Labour Relations) section
43(1); England, Arbitration Act sections 95-97; Rubino-Sammartano, International
Arbitration, 25-28.
2) The attribute “economic” is rarely given to international arbitration. The scope of
international economic arbitration is, in principle, identical to the scope of
international commercial arbitration. See Berger, International Economic Arbitration,
which effectively covers what is referred to elsewhere as international commercial
arbitration.
3) See, e.g., Redfern and Hunter, International Commercial Arbitration, paras 1-27.
4) See Berger, International Economic Arbitration, 67-69.
5) See, e.g., the Journal of International Economic Law which deals with international
economic integration as well as WTO issues. Also relevant textbooks and university
courses address international economic integration, WTO, TRIPS, GATT, GATS and
related issues.
6) See Qureshi, The World Trade Organization—Implementing International Trade Norms
(Manchester University Press 1996). For the WTO Settlement of Disputes mechanism
see, e.g., Petersmann, The GATT/WTO Settlement System (Kluwer Law International
1997); Palmeter and Mavroidis, Dispute Settlement in the World Trade Organization—
Practice and Procedure (Kluwer Law International 1999); Pescatore, Davey and
Lowenfeld, Handbook of WTO/GATT Dispute Settlement (Transnational and Kluwer Law
International 1997); Komuro, “The WTO Dispute Settlement Mechanism Coverage and
Procedures of the WTO Understanding”, 12(3) J Int'l Arb 81 (1995).
7) See, e.g., Soloway, “NAFTA's Chapter 11”, 16(2) J Int'l Arb 1 (1999); Anderson, “Prioritizing
an Agenda for Trade Dispute Settlement in North America”, 12(4) J Int'l Arb 113 (1995).
8) See, e.g., EC Directive 93/13 of 5 April 1993 on Unfair Contracts Terms in Consumer
Contracts, OJ 1993 L 95, 29, which on the basis of Article 3 and Annex point (g)
significantly restricts the effectiveness of arbitration clauses in consumer contracts.
See also England, Arbitration Act sections 89-92; see also Germany, ZPO section
1031(5) where a special form is required.
9) See, e.g., the subjective criterion (definition of merchant) codified in the German
Commercial Code, sections 1 et seq.
10) See, e.g., the objective criterion (definition of “acte de commerce”) codified in the
French Code de Commerce.
11) The Uniform Commercial Code is the model law prepared by the American Law
Institute and, with some amendments, it has been adopted by all US states. See
White and Summers, Uniform Commercial Code (5th ed, West 1999).
12) See, e.g., Goode, Commercial Law (2d ed, Penguin 1995); Schmitthoff's Export Trade
(10th ed, Sweet and Maxwell 2000).
13) See English Civil Procedure Rules, Part 49 together with the English Commercial Court
Practice Direction and the Commercial Court's Guide.
14) See, e.g., French domestic arbitration law; Fouchard Gaillard Goldman on
International Commercial Arbitration, para 64.
15) See, e.g., Canada, British Columbia International Commercial Arbitration Act 1986
Article 1(6); Bulgaria, Law on International Commercial Arbitration 2001 Article 1(2);
Cyprus, International Commercial Arbitration Law no 110/1987 sections 2(4) and (5).
Similarly, Egypt, Law no 27 of 1994 Promulgating the Law concerning Arbitration in
Civil and Commercial Matters Article 2; Ireland, Arbitration (International
Commercial) Act 1998 Article 3(1); Nigeria, Arbitration and Conciliation Act 1990
Article 57(1); Oman, Law of Arbitration in Civil and Commercial Matters 1997 Article 2;
Russian Federation, Law on International Commercial Arbitration 1993 Article 1(2);
Ukraine, Law on Commercial Arbitration 1994 Article 1(2) and Article 2.
16) See, e.g., Australia, Bahrain, Bermuda, Canada, Malta, Singapore.
17) See India, Arbitration Ordinance section 2(1)(f):
‘international commercial arbitration’ means an arbitration relating to
disputes arising out of legal relationships, whether contractual or not,
considered as commercial under the law in force in India and where at
least one of the parties is -
(i) an individual who is a national of, or habitually resident in any
country other than India; or
(ii) a body corporate which is incorporated in any country other than
India; or
(iii) a company or an association or a body of individuals whose central
management and control is exercised in any country other than
India; or
(iv) the Government of a foreign country.

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 18) See, e.g., Germany, Greece, Hong Kong, Hungary, Iran, Libya, Zimbabwe. Kaplan, “The
Hong Kong Arbitration Ordinance, Some Features and Recent Amendments”, 1 Am Rev
Int'l Arb 25 (1990) 29, justifies the Hong Kong decision to delete the reference to
“commercial” with the argument that the delimitation is incompatible with the
nature of common law.
19) See UN Doc A/40/17, para 22; Holtzmann and Neuhaus, Model Law, 33.
20) See Finland, Arbitration Act 1992 section 2. The French NCPC Article 1492 refers to
“international commercial interests”.
21) CIETAC Rules Articles 2(3) and (4); see also for another definition paragraph 1(2) 1995
Rules of the Moscow International Commercial Arbitration Court (ICAC). It provides
that matters which may be referred to the ICAC include disputes arising from
contractual or other civil-law relationships in the course of foreign trade and other
forms of international economic affairs between enterprises with foreign investment,
international associations and organizations set up in the territory of the Russian
Federation and from purchase and sale (delivery) of goods, contracts of service and
labour, exchange of goods and/or services, carriage of goods and passengers,
commercial representation or agency, leasing, scientific-technical exchange,
exchange with other results of intellectual activity, construction of industrial and
other objects, licensing operations, investment, crediting and settlement operations,
insurance, joint ventures and other forms of industrial and business co-operation.
22) See commentary by van den Berg, VIE YBCA 341 (1983).
23) See RM Investment & Trading Co Pvt Limited (India) v Boeing Company and another
(US), (1994) 1 Supreme Court Journal 657, (1997) XXII YBCA 710 (Supreme Court of India,
10 February 1994).
24) Tunisian Cour de cassation, 10 November 1993, Taieb Haddad and Hans Barett v
Société d'Investissement Kal, XXIII YBCA 770 (1998).
25) US Reservation on Accession to the New York Convention (took effect 29 December
1970). It is understood that personal, matrimonial and domestic employment matters
are not of a commercial nature.
26) See Paragraph International Inc (Nova Scotia, Canada) and Prograph Inc (US) and
Pictorius Incorporated (Nova Scotia, Canada) and Philip Cox and Paul Davies v Ralph
Barhydt (US), 928 F Supp 983, XXII YBCA 901 (1998) (ND Cal 1996).
27) See Interim Award of 18 November 1983 in ad hoc arbitration Erick Benteler KG and
Helmut Benteler KG (both FR Germany) v Belgian State and SA ABC (Belgium), Journal
des Tribunaux 230 (1984), X YBCA 37 (1985), Rev Arb 339 (1989).
28) Panama Convention, signed 30 January 1975.
29) See, e.g., Australia, Bermuda, Canada and also in the US where the Federal
Arbitration Act only applies to international and interstate arbitration.
30) See, e.g., France, England and the US. It has been suggested that the introduction of
an International Commercial Arbitration Act in the US would make clear that the
protective review standards appropriate for domestic disputes would not affect
cross-border arbitration. It would also clarify the relationship between federal and
state arbitration law: see Park, “Duty and Discretion in International Arbitration”, 93
Am J Int'l L 805 (1999) 822-3. See also Mantakou, “The Concept of International
Arbitration: An “Endangered Species”?”, 50 RHDI 139 (1997) who contends that
international arbitration free from restrictions imposed on domestic arbitration is
nowadays a seriously endangered species. It also suggested that the traditional
distinction between domestic and international arbitration is no longer useful.
31) See Fouchard, “Quand un arbitrage est-il international?”, Rev Arb 59 (1970) 64.
32) An almost verbatim approach is found in Portuguese law. See Portugal, Law no 31/86
Article 33. See also Tunisia, Arbitration Code 1993 Article 48(1)(d) (alternative
criterion).
33) See, e.g., Cour de cassation, 21 May 1997; Renault v V 2000 (formerly Jaguar France),
Rev Arb 537 (1997); Cour d'appel de Paris, 14 March 1989, Murgue Seigle v Coflexip, Rev
Arb 355 (1991); Cour d'appel de Paris, 8 December 1988, Chantiers Modernes v CMGC,
Rev Arb 111 (1989); Cour d'appel de Paris, 26 April 1985, Aranella v Italo-Equadoriana,
Rev Arb 311 (1985). For a more detailed discussion see Fouchard Gaillard Goldman on
International Commercial Arbitration, paras 114-126, current law, and paras 108-113 for
the pre-1981 case law. See also Delaume, “What is an International Contract? An
American and a Gallic Dilemma,” 28 ICLQ 258 (1979).
34) Cour d'appel de Paris, 14 March 1989, Murgue Seigle v Coflexip, Rev Arb 355 (1991). For
translation of the extract, see Fouchard Gaillard Goldman, on International
Commercial Arbitration, paras 120-121. This definition was confirmed by the Cour de
cassation, 21 May 1997, Renault v V 2000 (formerly Jaguar France), Rev Arb 537 (1997).
35) See England, Arbitration Act 1975 section 1(4)(a)(b) and Arbitration Act 1979 section
3(7)(a)(b). The 1996 Arbitration Act included a provision (section 85) which
distinguished between domestic and international arbitration but it was not brought
into effect.
36) See Mantakou, “The Concept of International Arbitration: An “Endangered Species”?”,
50 RHDI 142 (1997).
37) See Blessing, Introduction to Arbitration, para 472.
38) See Cour d'appel de Paris, 25 November 1993, Paco Rabanne Parfums v Les Maisons
Paco Rabanne, Rev Arb 730 (1994).

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 39) Model Law Article 1(4) provides that
if a party has more than one place of business, the place of business is
that which has the closest relationship to the arbitration agreement;
if a party does not have a place of business, reference is to be made to his
habitual residence.
40) See, e.g., Hungarian Act LXXI 1994 section 47. See also Canada, Ontario International
Commercial Arbitration Act section 2(3), RSO 1990 c. 1-9.
41) See, e.g., Tunisia, Arbitration Code Article 48.
42) Arbitration Ordinance sections 2L and 2M. Singapore, International Arbitration Act
section 15; for a detailed discussion on its application in practice see Hsu, “Section
15 of the Singapore International Arbitration Act – What are the options?, 2 IntALR 17
(1999).
43) See Bernardini, “L'arbitrage en Italie après la récente réforme”, Rev Arb 479 (1994)
483.
44) US, FAA section 202.
45) See Scherk v Alberto Culver, 417 US 506, 94 S Ct 2449 (1974) 2455; the judgment
introduces three non-restrictive criteria to assist in the characterisation of an
agreement as international.
46) See, e.g., Berger, International Economic Arbitration, 1-13;
47) This trend is best seen in US cases: Moses H Cone Memorial Hospital v Mercury
Construction Corp, 460 US 1 (S Ct 1983); Southland Corp v Keating, 465 US 1, 104 S Ct
852, 79 L Ed 2d 1 (S Ct 1984); Dean Witter Reynolds, Inc v Byrd, 470 US 213, 105 S Ct 1238,
84 L Ed 2d 158 (S Ct 1985). For these three cases (the new trilogy) see Carbonneau,
“L'arbitrage en droit americaine”, Rev Arb 3 (1988) 14-20. See also Shearson/American
Express, Inc v McMahon, 482 US 220, 107 S Ct 2332, 96 L Ed 2d 185 (S Ct 1987), XIII YBCA
165 (1988); Ofelia Rodriguez de Quijas and others v Shearson/American Express, Inc, 490
US 477 (S Ct 1989), XV YBCA 141 (1990). See also Mantakou, “The Concept of
International Arbitration: An “Endangered Species”?”, 50 RHDI 148 (1997).
48) See, e.g., Bulgaria, Canada (Quebec, and arguably also at the federal level), Egypt,
Finland, Germany, Hong Kong, Netherlands, Spain, Sweden. The dualist approach, i.e.,
special law for international arbitration, can be seen, e.g., in the US States which
adopted the Model Law (California, Connecticut, Oregon and Texas), France, Italy,
Peru, Portugal, Tunisia, and Switzerland.
49) See van den Berg, “Netherlands, A Special Report”, in Resolving Disputes
(International Financial Law Review 1991), 40.
50) It was found to be discriminatory to have two different systems. This argument was
supported by the EC obligation for non-discrimination and was highlighted in Philip
Alexander Securities and Futures v Werner Bamberger and others (1996), XXII YBCA 872
(1997) (English Court of Appeal).
51) Berger, International Commercial Arbitration, 746-748, however, suggests that it is
desirable to have separate regulation of domestic and international arbitration.
52) See Lew, “Internationalization – the Answer to Unification”, Proceedings of the Fifth
ICCA Conference (Kluwer 1976); Philip, “A Century of Internationalization of
International Arbitration: An Overview”; Hunter, Marriott and Veeder (eds),
Internationalization of International Arbitration, 25-35; Lalive, “The
Internationalization of International Arbitration: Some Observations”, ibid, 49-58;
Böckstiegel, “The Internationalization of International Arbitration: Looking Ahead to
the Next Ten Years”, ibid, 71-83; Shackleton, “The Internationalization of English
Arbitration Law”, 11(1) ICC Bulletin 16 (2000).
53) See, e.g., England, Arbitration Act section 2; Germany, ZPO section 1025.
54) See, e.g., Switzerland, PIL Article 176 and Model Law.
55) See the comprehensive summary in Goode, “The Role of Lex Loci Arbitri in
International Commercial Arbitration”, 17 Arb Int 19 (2000) 32-33.
56) See the discussion in Nakamura, “The Place of Arbitration in International Arbitration
– Its Fictitious Character and Lex Arbitri”, 15(10) Mealey's IAR 23 (2000); Rubins, “The
Arbitral Seat Is No Fiction: A Brief Reply to Tatsuya Nakamura's Commentary, ‘The
Place of Arbitration in International Arbitration – Its Fictitious Nature and Lex Arbitri’
”, 16(1) Mealey's IAR 23 (2001).
57) See Lew, Applicable Law, 253.
58) Ibid.
59) Mayer, “The Trend Towards Delocalisation in the Last 100 Years”, in Hunter, Marriott
and Veeder (eds), Internationalisation of International Arbitration, 37.
60) See Paulsson, “Delocalisation of International Commercial Arbitration: When and Why
It Matters”, 32 ICLQ 53-61 (1983); Paulsson, “Arbitration Unbound: Award Detached
from the Law of its Country of Origin”, 30 ICLQ 358 (1981).

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 61) See Cour de cassation, 9 October 1984, Pabalk Ticaret Limited Sirketi v Norsolor SA,
112 Clunet 679 (1985), with comment by Kahn, 681, Rev Arb 432 (1985) with note by
Goldman, 24 ILM 360 (1985) with note Gaillard, XI YBCA 484 (1986); Cour de cassation,
10 March 1993, Polish Ocean Line v Jolasry, Rev Arb 258 (1993), with note Hascher, 265,
XIX YBCA 662 (1994); Cour de cassation, 23 March 1994, Hilmarton Ltd v Omnium de
traitement et de valorisation – OTV, Rev Arb 327 (1994), XX YBCA 663 (1995); Cour
d'appel de Paris, 14 January 1997, The Arab Republic of Egypt v Chromalloy
Aeroservices Inc, Rev Arb 395 (1997), 12(4) Mealey's IAR B-l (1997), XXII YBCA 691 (1997).
62) The US decision Chromalloy Aeroservices Inc v The Arab Republic of Egypt, 939 F Supp
907 (DDC 1996) was criticised. See Petrochilos, 49 ICLQ 856 (2000); Schwartz, “A
Comment on Chromalloy Hilmarton, à l'américaine”, 14(2) J Int'l Arb 125 (1997).
63) See Kaufmann-Kohler, Arbitration at the Olympics, 3, 22, 80.
64) See, e.g., Katsch and Rifkin, Online Dispute Resolution, Rule, Online Dispute Resolution
for Business (Jossey Bass 2002).
65) See, e.g., Schneider and Kuner. “Dispute Resolution in International Electronic
Commerce”, 14(3) J Int'l Arb 5 (1997); Arsic, “International Commercial Arbitration on
the Internet – Has the Future Come Too Early?”, 14(3) J Int'l Arb 209 (1997); Hill, “The
Internet, Electronic Commerce and Dispute Resolution: Comments”, 14(4) J Int'l Arb
103 (1997); Kaufmann-Kohler, “Le lieu de l'arbitrage à l'aune de la mondialisation –
Réflexions à propos de deux formes récentes d'arbitrage”, Rev Arb 517 (1998);
Kessedjian and Cahn, “Dispute Resolution On-Line”, 32 Int'l Law 977 (1998); Donahey,
“Dispute Resolution in Cyberspace”, 15(4) J Int'l Arb 127 (1998); Hill, “On-line
Arbitration: Issues and Solutions”, 15(2) Arb Int 199 (1999). See also the contributions
by Gélinas, Hill, Antaki, Horning and Schneider, “Electronic Means for Dispute
Resolution: Extending the Use of Modern Information Technologies”, in Davis (ed),
Improving International Arbitration, 51. See also Goodman-Everard, “Arbitration in
Cyberspace — an Off-line, Low-tech Guide for Compucowards”, 14(3) Arb Int 345 (1998).
66) See Park, “The Lex Loci Arbitri and International Commercial Arbitration”, 32 ICLQ 21
(1983); Boyd, “The Role of National Law and the National Courts of England”, in Lew,
Contemporary Problems, 149 et seq.
67) See, e.g., Cour de cassation, 23 March 1994, Société Hilmarton Ltd v Société Omnium de
traitement et de valorisation (OTV), 121 Clunet 701 (1994); In re Chromalloy Aeroservices
Inc and The Arab Republic of Egypt, 939 F Supp 907 (DDC 1996), 35 ILM 1359 (1996); XXII
YBCA 1001 (1997) 1004; Cour d'appel de Paris, 14 January 1997, République arabe
d'Egypte v Chromalloy Aeroservices, Rev Arb 395 (1997), XXII YBCA 691 (1997).
68) Also, in the context of the Iran-US Claims Tribunals, the US Courts enforced anational
awards under the New York Convention. See, e.g., Ministry of Defense of the Islamic
Republic of Iran v Gould, 887 F 2d 1357 (9th Cir 1989), cert denied, 110 S Ct 1319 (1990);
Iran Aircraft Industries and Iran Helicopter and Renewal Company v A VCO Corporation,
980 F 2d 141 (2d Cir 1992).
69) See Belgium, Judicial Code Article 1717(3).
70) See Switzerland, PIL Article 192; Swiss Tribunal Fédéral, 21 December 1992,
Groupement d'Entreprises Fougerolle et consorts, BGE 118 I b, 562, 568.
71) See Lord Mustill in SA Coppée Lavalin NV et al v Ken-Ren Chemicals and Fertilizers Ltd
(in liquidation in Kenya) [1994] 2 WLR 631, 640.
72) Smit, “A-national arbitration”, 63 Tulane L Rev 62 (1989).
73) See Arfazadeh, “New Perspectives in South East Asia and Delocalized Arbitration in
Kuala Lumpur” 8(4) J Int'l Arb 103 (1991); Pradhan, “Kuala Lumpur, Regional Centre for
Arbitration: Arbitral Awards”, 2 Malayan Law Journal (1994) cxxiv et seq.
74) See Dezalay and Garth, Dealing in Virtue; Appelbaum and Felstiner (ed), Rules and
Networks: The Legal Culture of Global Business Transactions (Hart Publishing 2002).
75) Lionnet, “Should the Procedural Law Applicable to International Arbitration be
Denationalised or Unified? The Answer of the UNCITRAL Model Law”, 8(3) J Int'l Arb 5
(1991).
76) See Lazareff, “International Arbitration: Towards a Common Procedural Approach”, in
Frommel and Rider (eds), Conflicting Legal Cultures, 31; Lowenfeld, “International
Arbitration as an Omelette: What Goes into the Mix”, in Frommel and Rider (eds), ibid,
19.

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