Source: https://www.trans-lex.org/100400/_/berger-klaus-peter-international-economic-arbitration-deventer-boston-1993/
Timestamp: 2019-04-23 01:52:55+00:00

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Document-Id: 100400, Please cite as: "https://www.trans-lex.org/100400"
This limitation of liability is also applicable under Swiss law.250 German law goes even farther in that it shields the arbitrator from liability relating to his decision-making unless he commits crimes such as the unlawful acceptance of benefits or corruption under §§ 331 et seq. of the German Criminal Code.251 As the arbitrator is remunerated by the parties, he may run the risk of being accused of such crimes simply by demanding compensation for his services. Consequently, § 335 a of the German Criminal Code clarifies that an arbitrator's remuneration constitutes such crime only in those cases where the arbitrator demands or receives it 'behind the back of the other party'. Here, the German criminal law takes account of the Joint liability of the parties and the dangers of partiality where contacts between arbitrator and one of the parties are too close.252 The mere fact that the award has been set aside by the competent court may not in and of itself serve as a basis for arbitrator liability.253 However, a successful appeal against the award should be considered as a necessary precondition for a suit against an arbitrator for negligent or wrongful decision-making.254 A party who accuses the arbitrator of having rendered a wrong decision, but does not attack the award with the means provided for by the arbitration laws has to be suspected of using the suit against the arbitrator as a Surrogate for the missed opportunity to have the award set aside.
A possible liability of the arbitrator might arise out of undue delay of the proceedings255 or unjustified repudiation of his mandate256 - in both cases 238 the immunity of liability, which is limited to the actual decision-making of the arbitrators, does not apply - or from the, albeit highly unlikely, evident misuse of his office.257 Usually, these and similar kinds of misconduct on the part of the arbitrators will not result in a suit for damages. Instead, parties prefer to challenge the arbitrator and have him removed by the arbitral institution or the court.
Finally, the question remains whether the arbitrator's duty to create an enforceable award arises out of his mandate with the parties, thus implying that a violation of this duty could render the arbitrators contractually liable. This view is maintained in German doctrine.258 There is no doubt that in conferring authority upon an arbitrator to settle a dispute arising out of an international transaction, a term is implied in the parties' contract with the arbitrator that he will render an award which is enforceable under the New York Convention.259 A court judgment rendered in international proceedings will frequently be enforced against assets located in the Jurisdiction where the court has its seat, thus relieving the judge from considering possible enforcement problems abroad. The international arbitrator, however, sitting in a neutral forum that usually has no connection with the business of either of the parties, carries an enhanced responsibility for the enforceability of his award abroad under the New York Convention or domestic enforcement provisions.260 Art. 26 ICC-ArbR261 is thus the expression of a general principle of international economic arbitration. However, ensuring the enforceability of the award is a difficult task, given the multitude of possible enforcement fora. Sometimes, ensuring enforcement will even prove to be impossible if the arbitrators have to reconcile conflicting ordre public principles of those enforcement fora which 239 they are aware of.262 Therefore, the international arbitrator's Obligation to ensure the enforcement of the award is a purely procedural Obligation, a nobile officium which every arbitrator has on his checklist.263 It is converted into a contractual duty only in those cases where a party draws the arbitrator's attention to a public policy issue which might stand in the way of enforcement of the ultimate award. Even in these cases, though, a contractual liability of the arbitrator is in place only if a prima facie examination of the case reveals that the arbitrator could have easily avoided the problem, the proof of which will be impossible in most cases.
Art. 187 Sec. 1 of the Swiss SIPL requires the arbitrators to apply an objective test110 and decide the dispute 'according to the rules of law with which the case has the closest connection'. The Italian legislature has also followed this approach in its draft law on international arbitration.111 Imposing a specific choice of law rule on the arbitrators which is well known from international contract law112 seems conservative and reactionary given the liberal attitude of the new Swiss arbitration law.113 It also stands in strange contradiction to the rest of the law which provides parties and arbitrators only with a very basic procedural framework leaving the filling of the legislative gaps to the party autonomy or the procedural discretion of the parties.
The Dutch legislature has reacted to this criticism. Similar to the liberal French law on international arbitration,125 Art. 1054 Sec. 2 2nd sentence of the new Dutch Arbitration Act126 leaves room for the so-called direct method (voie directe)127 in that the tribunal may decide the dispute according to the 499 rules of law 'which it considers appropriate'. This allows the arbitrators to adopt a flexible approach in the determination of the applicable law without having recourse to conflict-of-laws rules,128 be it because all possible conflict-of-laws systems lead to the application of the same law,129 which resembles the comparative approach outlined above, or simply because the arbitrators consider a certain legal system as particularly appropriate for a 'fair and reasonable'130 solution of the case before them.
At the same time conflict-of-laws rules for international arbitrators must ensure the flexibility which is required to solve complicated conflict-of-laws problems in transnational economic transactions. The lack of a lex fori for international arbitrations and with it of a predetermined set of conflict-of-laws rules, the 500 strict distinction between a decision according to the rules of law and as amiable compositeur,132 and the insulation of the arbitrator's application of the law from any judicial review133 seem to require a restriction of the arbitrators' freedom to determine the applicable law. The efforts of international arbitrators to be guided, more than the state court judge, by practical considerations such as the underlying economic objectives of the contract in dispute,134 the legitimate expectations and interests of the parties135 - especially in upholding the validity of the contract136 and the possible consequences of their choice of law decision for the outcome of the case137 - require that the arbitrators are freed from the constraints of domestic conflict-of-laws systems.
Viewed against this practical background, the approach of the Swiss legislature seems to be preferable. It provides the arbitrators with a precise and less subjective criterion for the determination of the applicable law than does the voie directe, without forcing the tribunal to apply a prefabricated set of conflict-of-laws rules which may be totally inappropriate to deal with applicable law issues arising in complex international transactions.
'In complex international relationships such as that under review, a widely accepted choice of law principle in most jurisdictions . . . is the center of gravity, or the connection test. Under this test, the arbitrator selects the substantive law of the jurisdiction that has the greatest connection with the dispute . . .
'Le Tribunal arbitral jouit donc d'un large pouvoir d'appréciation dans le choix du droit applicable, voir d'un pouvoir discrétionnaire . . .
The understandable effort to provide parties and arbitrators with clear and predictable criteria for the determination of the applicable law explains that Art. 4 Sec. 2 of the ZuArbR obligates the arbitral tribunal to apply the conflict-of- 506 laws rules of the new Swiss SIPL. The Zurich Chamber of Commerce thus follows a recommendation given in Swiss legal doctrine to have the arbitrators apply the conflict-of-laws rules of the Swiss situs.169 Lalive contends that the Chamber of Commerce as a private cantonal institution may not substitute itself for the federal legislature and adopt a conflict rule different from and contrary to that enacted in Art. 187 SIPL.170 In his view, inclusion of the ZuArbR in the contract of the parties can hardly be regarded as a deliberate choice of the Swiss conflict-of-laws rules and even if so, the Zurich Chamber of Commerce cannot impose on the international arbitrator a different solution than that taken by the Swiss legislature. For these reasons, Lalive recommends that the international arbitrator, sitting in Zurich under the Chamber of Commerce Rules should disregard Art. 4 Sec. 2 and apply the special federal conflict-of-laws rule of Art. 187 SIPL instead.171 This view seems to neglect the special character of the conflict-of-laws rule contained in the Swiss act which, just as all the other provisions of the new Act, tries to give maximum room for the autonomy of the parties in order to do justice to the specificity of international economic arbitration. Due to the lack of a lex fori, the application of the conflict-of-laws rules of the tribunal's seat is not mandatory. The reference to the rules of the SIPL contained in the ZuArbR which the parties include in their contract can be regarded as a choice of the parties to apply the Swiss conflict-of-laws. The parties' designation of the choice of law rules to be applied by the arbitrators may be regarded as an indirect choice of law. The admissibility of such an indirect choice of law is acknowledged in international doctrine172 and has to be recognized under Art. 187 Sec. 1 SIPL.173 This approach may be impracticable and illogical as the parties' choice does not create the necessary certainty as to the applicable substantive law which every choice of law decisions should provide. The parties have no certainty that the tribunal will actually apply the choice of law rule in the sense anticipated by them at the time of the conclusion of the agreement.174 Leaving aside these practical considerations, there is nothing to prevent the parties from this kind of indirect choice of law. Even if one is of the opinion that Art. 187 Sec. 1 SIPL concerns only the direct choice of law, Art. 4 ZuArbR does not violate the Statute. Given the liberal attitude of the new law, the choice of law rule contained in Art. 187 Sec. 1 must be deemed to be non-mandatory.175 If the 507 legislature allows the parties to free the arbitrators from the constraints of a domestic law176 then, a contrario, the parties must also be allowed to authorize the tribunal to decide according to the rules which a Swiss court would apply in deciding their case.177 However, the international orientation of the ZuArbR requires that the sweeping reference to the rules of the SIPL excludes all those norms which contravene the task of an international arbitrator. This is true for all those norms which deal with the special relationship of foreign law and Swiss ordre public.178 There is common agreement in international doctrine that contrary to the courts at the seat of the arbitration, the international arbitrator is no guardian of the seat's broad ordre public but is only bound to apply the restricted notion of ordre public international.179 One must assume that the ZuArbR as a modern set of arbitration rules do not intend to equate the function of an international arbitrator with that of a Swiss court judge. Instead, the reference in Art. 4 Sec. 2 is merely intended to provide the arbitrators and parties with a workable and predictable framework for the determination of the applicable law which conforms with the modern trends in international private law. This is true for Art. 117 et seq. SIPL which provide modern and concrete criteria for the determination of the applicable law. Art. 4 Sec. 3 ZuArbR reflects that the application of the rules of the Swiss SIPL is no absolute dogma.
The above analysis of modern arbitral practice also hints at another main function of the conflict-of laws rules contained in the modern arbitration laws. They are intended to clarify that the arbitrators are not ipso jure required to apply the conflict-of-laws system of the seat of the arbitration186 and put an 509 end to the long-lasting187 dispute which has evolved around this question in the past decades.
"If a party does not pay off a monetary debt when it falls due, the aggrieved party may [without having to justify any loss] ask for interest upon that sum [from the date of maturity or notice, by application of Article 6.4.2].
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References: § 335
 Art. 26

Art. 187
 Art. 1054
 Art. 4
 Art. 187
 Art. 4
 Art. 187
 Art. 187
 Art. 187
 Art. 4
 Art. 187
 Art. 4
 Art. 117
 Art. 4