Breaking the ice in the international commercial arbitration: from the finality of arbitral award to the arbitral appeal
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Breaking the ice in the international commercial arbitration: from the finality of arbitral award to the arbitral appeal mechanism Yilei Zhou
© China-EU School of Law 2013
Abstract The finality of an arbitral award was regarded as one of the main advantages of arbitration. However, further to recent events that have arisen in international investment arbitration, finality of arbitral award is not necessarily advantageous and may not result in a fair and just arbitral award. Thus, in recent years, international academic discourse has focused on how to reform arbitral procedural rules, particularly with regard to establishing an arbitral appeal mechanism. This paper investigates the rules and legislation regulating international investment arbitration legislation in principal countries, focusing particularly on the relativity of finality of an arbitral award, and the prospect of introducing an appellate mechanism. This paper will examine current practices relating to international investment arbitration, in order to ascertain the potential contributions that an arbitral appeal mechanism may make in promoting international investment arbitration. Recommendations will also be made with regard to the formation of an arbitral appeal mechanism. Keywords International investment arbitration · Finality of arbitral award · Arbitral appeal mechanism
1 Contradictions in finality of arbitral award International investment arbitration is the process of resolving business disputes among transnational parties through the use of one or more arbitrator as an alternative to pursuing litigation through the court system.1 As the number of 1
Greenberg et al. 2011, p. 6.
Y. Zhou (&) Cornell University Law School, Myron Taylor Hall, Ithaca, NY 14853, USA e-mail: [email protected]
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international commercial disputes increases the frequency in the use of arbitration to resolve such disputes also increases. The non-judicial nature of arbitration makes it both attractive and effective. However, the finality of the arbitral award appears to have been a problematic issue that has been encountered in a number of international investment arbitrations. The finality of an arbitral award, namely that an arbitration award is binding and not subject to appeal on the merits, has generally been regarded as an advantage over judicial settlement.2 A contradictory view is however emerging. It is opined by some commentators that although finality is one of the main advantages of international investment arbitration—due to the savings it brings in costs and time— this may not outweigh the risk of having to live with a flawed or inconsistent award on the same or very similar questions or facts. Where an erroneous arbitration award is made damaging repercussions may follow particularly with respect to the integrity of the arbitral process. Academic discourse regarding the introduction of an appeal for international commercial disputes was initiated in the early 1990s.3 Compared with litigation, scholars have expressed different opinions towa
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