EXCLUSION OF ARBITRAL PROCEDURE FROMTHE SCOPE OF PUBLIC POLICY SCRUTINY AS A
MEASURE TO CURB DUE PROCESS PARANOIA: A
PROPOSAL UNDER THE UNCITRAL MODEL LAW
Koji Takahashi“Due process paranoia” is a recent buzz phrase in arbitration circles. It
refers to the mental state of arbitrators who harbour an exaggerated
concern or suspicion that they may be condemned by national courts for
failing to comply with the due process requirements. It may result in the
prolongation of arbitration proceedings and the escalation of costs, two of
the major vices plaguing arbitration today. To curb this form of paranoia,
this article will suggest that arbitral procedure, as opposed to the substanceof the award, should be excluded from the scope of public policy scrutiny
in the context of annulment under the UNCITRAL Model Law onInternational Commercial Arbitration. Though it is at odds with aconventional interpretation of the Model Law, this reading will remove a
breeding ground for “due process paranoia” without causing unwelcome
side effects.

Professor at the Doshisha University Law School (Kyoto, Japan).

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I. INTRODUCTION .................................................................................. 573
II. DUE PROCESS PARANOIA ................................................................. 573
III. CAUSE AND EFFECT OF PARANOIA .................................................. 574
IV. WHY PARANOIA IS PROBLEMATIC .................................................. 576
V. COURTS’ DEFERENCE TO ARBITRATORS .......................................... 577
VI. DUE-PROCESS RELATED GROUNDS ................................................ 578
VII. PUBLIC POLICY .............................................................................. 578
A. UNCITRAL Report ................................................................ 579
B. Need to Curb Paranoia............................................................ 579
C. Overlap with Other Due-Process Related Grounds ................ 580
D. Sua Sponte Scrutiny of Procedure .......................................... 581
VIII. CONCLUSION................................................................................. 582

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Exclusion of Arbitral Procedure573

INTRODUCTION1

The UNCITRAL Model Law on International Commercial Arbitration2(hereafter “Model Law”) sets forth a number of grounds for setting aside
arbitral awards (Article 34(2)) including the breach of public policy (subparagraph (b)(ii)).3 On a conventional interpretation, the public policy
scrutiny under this provision extends to arbitral procedure as well as thesubstance of awards.
This article will suggest that arbitral procedure should be excluded
from the scope of public policy scrutiny in the context of annulment under
the Model Law. The aim of this suggestion is to curb so-called “dueprocess paranoia.” As discussed below, the public policy scrutiny ofarbitral procedure is a breeding ground for “due process paranoia” and its
removal will not cause any unwelcome side effects under the Model Law.
II. DUE PROCESS PARANOIA“Due process paranoia” is a recent buzz phrase in arbitration circles.4
Generally, paranoia refers to the mental state of someone who harbours an
excessive or irrational suspiciousness and distrustfulness of others.5 In the
1. The Michigan State International Law Review editors request the reader please
note that while the Michigan State International Law Review uses The Bluebook: A
Uniform Style of Citation for published articles, some citations within this article do notadhere to The Bluebook and follow international citation conventions requested by theauthor.
2. For the text, see the website of UNCITRAL at https://uncitral.un.org (lastvisited April 30, 2021). The UNCITRAL stands for the United Nations Commission on
International Trade Law. There are two versions to the Model Law: the original 1985
version and the amended 2006 version. The discussion in this article is version agnostic.
3. In the context of the recognition or enforcement of an award, similar grounds
for refusal are laid down in Article 36(1)(b)(ii) of the Model Law and Article V(2)(b) of
the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958
[hereinafter New York Convention] (For the text, see the website of UNCITRAL, supranote 2).
4. This phrase spread after it was used in WHITE & CASE ET AL., 2015

INTERNATIONAL ARBITRATION SURVEY: IMPROVEMENTS AND INNOVATIONS IN
INTERNATIONALARBITRATION
2,
10(2015),
http://www.arbitration.qmul.ac.uk/media/arbitration/docs/2015_International_Arbitration_Survey.pdf [hereinafter WHITE & CASE ET AL. 2015].
5. SeeParanoia,
MERRIAM-WEBSTER,
https://www.merriamwebster.com/dictionary/paranoia (last visited Feb. 1, 2021).

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context of arbitration, due process paranoia refers to the mental state ofarbitrators who harbour an exaggerated concern or suspicion that they may
be condemned by national courts for failing to comply with the due
process requirements. This form of paranoia is often triggered by the
introduction of a new argument or evidence at the eleventh hour, the lastminute request for the rescheduling of a hearing, or a request for theextension of a cut-off date.
III. CAUSE AND EFFECT OF PARANOIAIn deciding on such requests, the arbitrators may have discretion under
the applicable law. Where the applicable law is based on the Model Law,
the pertinent provisions are as follows: Article 18: “[E]ach party shall begiven a full opportunity6 of presenting his case.” Article 19(2): “[T]ribunal
may . . . conduct the arbitration in such manner as it considers appropriate.
The power conferred upon the arbitral tribunal includes the power todetermine the admissibility . . . of any evidence.” Article 23(2): “[E]ither
party may amend or supplement his claim or defence during the course of
the arbitral proceedings, unless the arbitral tribunal considers it
inappropriate to allow such amendment having regard to the delay inmaking it.” Article 25(c): “[If] any party fails to appear at a hearing or to
produce documentary evidence, the arbitral tribunal may continue theproceedings and make the award on the evidence before it.”Though the arbitrators have such procedural discretion, they have astrong incentive to avoid rendering an award which is vulnerable tochallenge on procedural grounds. A successful challenge may tarnish theirreputation. It is a serious matter for them because, unlike judges who are
sitting on duties, arbitrators are hired by parties.
Consequently, there is a tendency that arbitrators become reluctant to
act decisively in the conduct of arbitral proceedings. This is a finding ofan empirical survey in 2015 collating the views of arbitration
stakeholders.7 A more recent report in the same series of survey published6. The phrase “full opportunity” is generally interpreted as meaning “reasonable
opportunity.” See, e.g., U.N. Secretary-General, Analytical Commentary on Draft Text ofa Model Law on International Commercial Arbitration, art. 19 n.8, U.N. Doc A/CN.9/264(Mar. 25, 1985) (stating that the right to a “‘full opportunity of presenting one’s case’ does
not entitle a party to obstruct the proceedings by dilatory tactics and, for example, present
any objections, amendments, or evidence only on the eve of the award”).
7. WHITE & CASE et al. 2015, supra note 4, at 2, 10.

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in 2018 also notes that due process paranoia “continues to be one of themain issues that users believe is preventing arbitral proceedings frombeing more efficient.”8 A later report in 2019, focusing on construction
arbitration, again notes that due process paranoia “was regarded as thesignificant factor discouraging arbitrators from taking a more robust
approach to case management.”98. WHITE & CASE ET AL., 2018 International Arbitration Survey: The EvolutionofInternational
Arbitration3,24(2018),
https://www.whitecase.com/publications/insight/2018-international-arbitration-surveyevolution-international-arbitration [hereinafter WHITE & CASE ET AL. 2018].
9. PINSENT MASONS ET AL., 2019 International Arbitration Survey—Driving
Efficiency
inInternational
Construction
Disputes,
6,24(2019),
https://www.pinsentmasons.com/thinking/special-reports/international-arbitration-survey.

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IV. WHY PARANOIA IS PROBLEMATIC

While due process is a positive concept, due process paranoia isproblematic because it may result in the prolongation of proceedings andthe escalation of costs.10 As shown in the chart above,11 the high cost, lackof speed, and absence of effective sanctions during the proceedings areamong the worst characteristics of arbitration in the opinion of
stakeholders.
The parties to an arbitration agreement have opted out of the open-court
litigation in favour of the supposedly faster and cheaper method of the
dispute resolution, which is closed to the public. It is, therefore, arguablethat the parties to an arbitration agreement have accepted that theguarantee of due process in their chosen method of dispute resolution is
not as extensive as in litigation.

10. It must, however, be acknowledged that due process paranoia is not the only
cause for delay and high costs in arbitration. Unlike judges, arbitrators contractually agree
to provide a dispute resolution service. In order to obtain customer satisfaction, they would
naturally be more inclined than would judges to provide the parties with opportunities tothoroughly present their case, conscious also of the finality of their decision.
11. WHITE & CASE et al. 2018, supra note 8, at 8.

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V. COURTS’ DEFERENCE TO ARBITRATORSIn the course of debate over due process paranoia, one article surveyed
the case law of major seats of arbitration and found that due processparanoia was unfounded in “many different jurisdictions” because thecourts would generally take deferential attitude towards arbitrators’
conduct of proceedings.12 It also observed that the courts generally abided
by what the article dubs “procedural judgment rule,” which would direct
the courts to see whether arbitrators’ procedural decision was “reasonable”
in the circumstances.13
This finding will be comforting to the arbitrators operating in suchjurisdictions. In terms of conceptual analysis, however, it is only stating
the obvious: due process paranoia is a paranoia. For paranoia is bydefinition unfounded. Moreover, the “procedural judgment rule” will not
be so helpful because a test based on the ambiguous notion of“reasonableness” would not allay the apprehension from which due
process paranoia arises.
What ought to be done is rather to look at the specific rules forreviewing arbitral awards in the specific jurisdictions where review may
be conducted in any given case. This paper will focus on the review in thecontext of annulment under the Model Law as the latter has been adopted
in many jurisdictions. Arbitral awards are also reviewed in the phase ofrecognition and enforcement and the review in that context is likely to be
conducted under the New York Convention, of which most majorcountries are contracting States.14 It is, however, not the main focus of thisarticle, since due process paranoia would be more directly caused by theperception of how the local courts at the seat of arbitration would conduct
the review.

12. Klaus Peter Berger & J. Ole Jensen, Due Process Paranoia and the Procedural
Judgment Rule: A Safe Harbour for Procedural Management Decisions by International
Arbitrators, 32 ARB. INT’L 415, 415 (2016); Id. at 423.
13. Id. at 428.
14. See Status: Convention on the Recognition and Enforcement of Foreign
Arbitral
Award
(New
York,
1958),

https://uncitral.un.org/en/texts/arbitration/conventions/foreign_arbitral_awards/s
tatus2 (last visited Feb. 1, 2021).

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VI. DUE-PROCESS RELATED GROUNDSThe Model Law sets forth grounds for setting aside awards in Article
34(2), of which many are related to due process. They include the omissionof proper notice (sub-paragraph (a)(ii)), inability to present one’s case(sub-paragraph (a)(ii)), deciding on matters beyond the scope ofsubmission (sub-paragraph (a)(iii)), the lack of conformity of thecomposition of tribunal or procedure with the parties’ agreement or the
Model Law (sub-paragraph (a)(iv)), and the breach of public policy (subparagraph (b)(ii)).15
The opening words of Article 34(2), which state an arbitral award “maybe set aside,”16 indicate that the reviewing court has discretion not to annul
the award even if there is a ground for doing so. Moreover, whenevaluating the conformity of the procedure with the Model Law under subparagraph (a)(iv), the court will have to take into account the procedural
discretion which the Model Law confers on the arbitral tribunal. Thus, as
noted earlier in this article, the tribunal has discretion whether to allow a
party to amend his claim or defense in light of the delay in making theamendment.17 The court consequently has leeway to show deference to thearbitral decision or discretion on the conduct of proceedings. It follows
that there is an ample room for something like the “procedural judgmentrule” to operate. As just noted above, however, that itself will not be
sufficient to alleviate arbitrators’ apprehension. Rather, the very existenceof the leeway is a source of anxiety and suspicion of arbitrators.
VII. PUBLIC POLICY
What will be effective to allay the concerns of arbitrators is to eliminate
an unnecessary margin of appreciation from the reviewing court’s power.
To do so, this article will now turn to the notion of public policy. As noted
above, the Model Law provides that if “the award is in conflict with the
public policy,” it may be set aside (Article 34(2)(b)(ii)). The propositionof this article is that the public policy scrutiny should be confined to the

15. In the context of the recognition or enforcement of an award, similar grounds
for refusal are laid down in Article V of the New York Convention, supra note 3.
16. Emphasis is added on the word “may.”
17. See also Arts. 18, 19(2), 25(c), which are also noted earlier in this article.

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substance of the award, thus excluding the arbitral procedure from thereview.
A. UNCITRAL Report
It must be acknowledged that this proposition is somewhat
controversial. A conventional interpretation is that the public policy
scrutiny extends to procedure as well as the substance of awards. Thus,
commenting on the draft of the Model Law, the UNCITRAL Report says:
It was understood that the term “public policy,” which was used in the1958 New York Convention and many other treaties, covered
fundamental principles of law and justice in substantive as well asprocedural respects. Thus, instances such as corruption, bribery or fraud
and similar serious cases would constitute a ground for setting aside. It
was noted, in that connection, that the wording “the award is in conflictwith the public policy of this State” was not to be interpreted as
excluding instances or events relating to the manner in which an award
was arrived at.18

This passage indicates the legislative intent behind the Model Law.19 It
is not, however, fruitful to dwell on it since what is more important is to
explore the most rational interpretation in the present-day environment.
B. Need to Curb Paranoia
The public policy scrutiny of arbitral procedure is a breeding groundfor due process paranoia due to the insularity and opaqueness of theconcept “public policy.”
The meaning of “public policy” is different from one State to another.
The Model Law indeed speaks of “the public policy of this State”20 (Article
34(2)(b)(ii)). It is prone to raise suspicions in the mind of foreign

18. Report of the United Nations Commission on International Trade Law on theWork of Its Eighteenth Session U.N. Doc. A/40/17 para. 297 (1985).
19. There is an indication that the public policy scrutiny under the New York
Convention, too, was intended to cover arbitral procedure as well as the substance of anaward; UN Economic and Social Council, “Report of the Committee on the Enforcementof International Arbitral Awards”, ¶ 37, U.N. Doc. E/AC.42/4/Rev.1 (1955).
20. Emphasis is added on the word “this.”

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arbitrators that it may be something insularly unique to the State inquestion.
Because of the opaqueness of the concept, an old English judge opinedthat “[p]ublic policy . . . is ‘a very unruly horse, and when once you get
astride it you never know where it will carry you.’”21 Though Lord
Denning later stated, “[w]ith a good man in the saddle, the unruly horse
can be kept in control,”22 it is beside the point in the present discussion.
For what matters is not whether the court is actually a good man in thesaddle, but rather whether the court could be trusted by arbitrators as agood man in the saddle. It follows that the exclusion of arbitral procedurefrom the public policy scrutiny would enhance the legal certainty andtransparency and would be effective to curb due process paranoia.
C. Overlap with Other Due-Process Related Grounds
Is there, then, any price for excluding arbitral procedure from the public
policy scrutiny? This question could be answered in the negative. The
exclusion would not entail sacrificing due process because if an arbitral
tribunal takes any procedural step repugnant to the public policy, it would
usually fall foul of other due-process related grounds for annulment under
Article 34(2).
If, for example, an arbitral tribunal has infringed the principle of equal
treatment which is guaranteed under Article 18 of the Model Law, it would
fall foul of a ground for annulment which may be invoked where theprocedure was not in accordance with the Model Law (Article
34(2)(a)(iv)). Similarly, if an arbitral tribunal is tainted with corruption
with a result that its impartiality and independence are undermined, itwould fall foul of another ground for annulment which may be invokedwhere the composition of tribunal was not in accordance with the Model
Law (Article 34(2)(a)(iv)), given that a tribunal is supposed to be impartial
and independent under Article 12 of the Model Law. Likewise, if anarbitral tribunal has been defrauded into accepting forged materials as
evidence, it would fall foul of another ground for annulment which may
be invoked where the party filing the motion, referring in this context to

21.
22.
(AC).

Richardson v. Mellish, (1824) 2 Bing. 229, 252.
Enderby Town Football Club Ltd. v. Football Ass’n Ltd. [1971] Ch. 591, 606

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the innocent party who has lost the case owing to the forged evidence, wasunable to present its case (Article 34(2) (a)(ii)).
The overlap with these specific grounds for annulment begs thequestion whether there is any need for a residual due-process related
ground for annulment. Should there be any, it would in any event be
outweighed by the need to curb due process paranoia.
D. Sua Sponte Scrutiny of Procedure
It must be acknowledged that while the public policy violation may beascertained by the courts sua sponte (of its own accord), the other dueprocess related grounds may only be invoked if the party filing the motion
furnishes proof. This is indicated by the introductory clause of therespective sub-paragraphs (a) and (b) of Article 34(2).23 There is certainly
a good reason for scrutinizing the substance of an award sua sponte. It is,however, doubtful whether the sua sponte scrutiny of arbitral procedure ismeaningful, possible, necessary or appropriate.
Firstly, the meaningfulness of sua sponte scrutiny is doubtful because
the scrutiny of procedure is only commenced upon the filing of anannulment application by one of the parties. And that party will gladly
assist the court in scrutinising the procedure.
Secondly, the possibility of sua sponte scrutiny is doubtful because thescrutiny of arbitral procedure would be difficult without the parties’
cooperation. How could the court establish the inequality of treatment,
corruption, or fraud in the absence of the parties’ pleading and proof?
Thirdly, the necessity of sua sponte scrutiny of arbitral procedure isdoubtful because the due process requirements purport first and foremost
to protect private interests. Moreover, though this may soundcontroversial, the due process requirements are arguably not meant toprotect the public interest in the context of arbitration. Unlike a national
court which is a permanent body, an arbitral tribunal is constituted on a

23. This distinction is said to be of particular importance in German arbitration law
due to the fact that the three-month limitation period is not applicable where a court invokes
the ground ex officio. This is cited as a reason why a majority of German courts and scholars
take the view that various aspects of procedure are covered by the “public policy” ground.
See Stefan Michael Kroll & Peter Kraft, Part II: Commentary on the German Arbitration
Law, in Patricia Nacimiento, Stefan Michael Kroll, et al. (eds) ARBITRATION IN GERMANY:THE MODEL LAW IN PRACTICE 398 (2d ed. 2015).

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case-by-case basis. One tribunal’s breach of due process would not havemuch bearing on how other tribunals will conduct the proceedings.
Finally, the appropriateness of sua sponte scrutiny of arbitral procedure
is sometimes doubtful. If, for example, a tribunal rules against the party
from whom it has received a bribe, it is questionable whether the award
should be annulled due to corruption.
VIII.

CONCLUSION

This article has argued that the review under Article 34(2)(b)(ii) of the
UNCITRAL Model Law should be confined to the substance of an award,
thus excluding the arbitral procedure from the public policy scrutiny.24
This proposition is supported by both the need for, and the permissibilityof, the exclusion.
The need for the exclusion derives from the widely recognised
phenomenon of due process paranoia. There is now a heightenedawareness of it as being a cause of delay and high costs in arbitration. This
point ought to be emphasized in the present-day climate of arbitration.
Arbitration was once commended for expeditiousness andinexpensiveness. Arbitration today is plagued by delays and high costs.
The public policy scrutiny of arbitral procedure breeds due processparanoia because of the insularity and opaqueness of concept “public
policy.”The exclusion of arbitral procedure from the public policy scrutiny
would be permissible because the other due-process related grounds forannulment under the Model Law would cover most, if not all, instanceswhere arbitral procedure may be considered to have violated public policy.
Furthermore, it is doubtful whether the sua sponte scrutiny of arbitralprocedure is meaningful, possible, necessary or appropriate.

24. Cf. Shubham Jain, “Public Policy” as the Root Cause of Due Process
Paranoia: An Examination of the Statutes and Court Decisions in India, 6 INDIAN J. ARB.
L. 145, 153 (2018). Jain acknowledges that due process paranoia is bred by public policy
scrutiny. He argues that to curb due process paranoia, courts should allow the invocationof public policy ground only when enforcement will lead to gross violation of fundamental
procedural rights. Id. He does not, however, go so far as suggesting that arbitral procedure
should be excluded from the scope of public policy scrutiny, accepting that the latter is a
useful and necessary tool to address due process violation. Id.

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The present author has previously put forward the same proposition
elsewhere25 in the context of the Japanese Arbitration Act.26 The Japanese
Act is largely based on the original 1985 version of the Model Law with afew differences. It allows annulment where “the content of the award” isin conflict with the public policy (Article 44(1)(viii)), whereas the Model
Law simply states that “the award” is in conflict with the public policy(Article 34(2)(b)(ii)). To that extent, it should be easier under the Japanese
Act to argue for the proposition that arbitral procedure should be excluded
from the public policy scrutiny. 27 This article has sought to demonstratethat it is possible to maintain the same proposition under the Model Law
without such a textual feature as exists in the Japanese Act. It is hoped thatthe suggestion made here will be of value to the large number ofjurisdictions where the Model Law has been adopted as a basis for theirarbitration law.

25. Koji Takahashi, Country Report: Japan, in DUE PROCESS AS A LIMIT TO
ARBITRAL DISCRETION 251, 261 (Franco Ferrari, Friedrich Rosenfeld, & Dietmar Czernich
eds., 2020).
26. Japanese Arbitration Act, Law No. 138 of 2003.
27. Notwithstanding that, the Japanese case law currently takes the opposite
position and the scholarly opinion is divided.