Excess of Powers in International Commercial Arbitration

List of Abbreviations xxiii
Part I
I Introduction 3
1 Preliminary remarks 3
1.1 The power to resolve disputes 3
1.2 The role of legal theories on arbitration 4
1.3 The discourse over “the excess of mandate” type of challenge 5
1.4 The concept of the arbitral tribunal’s mandate and potential problems in testing its excess 6
1.5 Working definition of the arbitral tribunal’s mandate 6
1.6 Two dimensions of the mandate and their competing characteristics 7
1.7 The exceptional character of the post-award procedure 7
1.8 The place of the “excess of mandate” type of challenge within other grounds for review of the arbitral award 8
2 Research question(s) and objectives/problem statement 8
3 Methods and methodology 9
3.1 Methods and legal sources 9
3.2 The functional comparison 11
4 The structure of the research 11

II The UNCITRAL Model Law on International Commercial Arbitration 13
1 Introduction 13
2 Court standard of review at the post-award stage 15
2.1 The universal “pro-arbitration” approach 15
2.2 The scope of the court’s review 16
2.3 Remedies at the court’s disposal 20
3 The concept of the arbitral tribunal’s mandate under the Model Law 22
3.1 Temporal aspect of the tribunal’s adjudicative function 22
3.2 Violation of the scope of the submission to arbitration 23
4 Limits to the arbitral tribunal’s “mandate” 24
4.1 Agreement to arbitrate 25
4.2 Parties’ (subsequent) submissions 26
4.3 Mandatory rules of law of public policy character 27
4.4 The importance of the consent, the request and the law: the three keyholes test 29
5 The Model Law approach to the “excess of mandate” type of challenge 30
5.1 Differences in the official language versions of the Model Law and the implementation of the Model Law 30
5.2 Textual interpretation of Article 34(2)(a)(iii) of the Model Law 33
5.2.1 The importance of “the submission to arbitration” 33
5.2.2 The difference between “the terms of the submission to arbitration” and “the scope of the submission to arbitration” 35
5.2.3 The meaning of a “dispute” 37
5.2.4 The meaning of “matters” 38
5.2.5 Conclusion of the textual analysis 39
5.3 The interface between grounds for challenge prescribed by the Model Law 39
6 Application of the three keyholes test to selected issues that might fall outside the arbitral tribunal’s “mandate” 41
6.1 Decisions on parties’ claims 42
6.1.1 Decision on contractual claims 42
6.1.2 Decision on contractual counterclaims 43
6.1.3 Decision on set-off 45
6.1.4 Decision on claims/counterclaims based on torts or pre-contractual liability 49
6.1.5 Decision on newclaims/counterclaims and change of claims/counterclaims 51
6.1.6 Decision not covering all claims/counterclaims 53
6.2 Process of application of law by the arbitral tribunal 55
6.2.1 Determining the method of selection of applicable law 55
6.2.2 Decision on applicable law 58
6.2.3 Ascertaining the content of applicable law by the arbitral tribunal 59
6.2.4 Application of mandatory rules of law(of public policy character) by the arbitral tribunal 62
6.2.5 Decision reached ex aequo et bono or as amiable compositeur 64
6.3 Decisions on remedies 66
6.3.1 Decision on damages 66
6.3.2 Decision on specific performance 69
6.3.3 Decision on contract adaptation and filling of gapsin the contract 69
6.4 Decisions accessory to the parties’ main submissions and the merits of the case 72
6.4.1 Decision on interest 72
6.4.2 Decision on costs 74
6.4.3 The procedural decisions of the arbitral tribunal 76
7 Concluding remarks 76

III France and Book IV of the Code of Civil Procedure 79
1 Introduction 79
2 Dualism of the French arbitration regime: different statutory architecture for domestic and international arbitration 81
2.1 Legal framework for international arbitration 81
2.2 The importance of domestic arbitration law 84
3 Court standard of review during the setting aside 86
3.1 Pro-arbitration approach towards the arbitration award 86
3.2 The scope of the court’s review 87
3.3 Remedial powers of the courts 90
4 Delineation of the mandate: the importance of the consent, the request and the law: the three keyholes test 91
4.1 Agreement to arbitrate 91
4.2 Relevance of parties’ submissions: reference of a dispute and other requests of the parties 93
4.3 Mandatory rules of law of (French international) public policy and their impact 95
5 The French concept of the arbitral tribunal’s mandate and testing its excess at the post-award stage 96
5.1 The functional aspect of the arbitral tribunal’s mandate 98
5.2 The contractual framework of the arbitral tribunal’s mandate 99
5.3 The time limits for the execution of the arbitral tribunal’s mandate 101
5.4 The concept of the mandate (and of its excess) under
Article 1520(3) of the CCP 102
5.5 (Contractual) waiver of the right to set an arbitral award aside 104
6 Application of the excess of mandate ground to selected decisions of
the arbitral tribunal 105
6.1 Decisions on parties’ claims 105
6.1.1 Decision on contractual claims 106
6.1.2 Decision on contractual counterclaims 110
6.1.3 Decision on set-off 113
6.1.4 Decision on claims/counterclaims based on torts or pre-contractual liability 116
6.1.5 Decision on newclaims/counterclaims and change of claims/counterclaims 117
6.1.6 Decision not covering all claims/counterclaims 119
6.2 Process of application of law by the arbitral tribunal 121
6.2.1 Decision on the method of determining applicable law 121
6.2.2 Decision on applicable law 123
6.2.3 Ascertaining the content of applicable law by the arbitral tribunal 125
6.2.4 Application of mandatory rules of law by the arbitral tribunal 128
6.2.5 Decision reached as amiable compositeur or on equity 132
6.3 Decisions on remedies 136
6.3.1 Decision on damages 137
6.3.2 Decision on specific performance 139
6.3.3 Decision on contract adaptation and filling of gapsin the contract 140
6.4 Decisions accessory to the parties’ main submissions and the merits of the case 143
6.4.1 Decision on interest 143
6.4.2 Decision on costs 145
6.4.3 Decision on procedure 147
7 Concluding remarks 152
IV England and the Arbitration Act of 1996 157
1 Introduction 157
2 Historical overviewof the development of judicialscrutiny over arbitral awards under English arbitration law 161
2.1 Judicial control of arbitral awards before the 1889 Act 162
2.2 Judicial review of arbitral awards before the 1996 Act 165
2.3 The 1996 Act: work in progress 168
3 The three-headed concept for the challenge procedure 169
4 Testing the scope of the substantive jurisdiction: the importance of the contractual framework for the arbitral tribunal’s powers 171
4.1 The court standard of review when faced with the challenge 172
4.1.1 The scope of the court’s review 172
4.1.2 Remedies at the court’s disposal 174
4.2 Limits to the scope of the arbitral tribunal’s substantive jurisdiction 177
4.2.1 The agreement to arbitrate and its scope 178
4.2.2 Relevance of parties’ submissions 180
4.2.3 Overriding and mandatory rules of public policy 180
5 Substantial injustice and the concept of “serious irregularities” and its relevance for testing the mandate 181
5.1 The court’s standard of review as conditioned upon the seriousness of irregularity 181
5.1.1 The scope of the court’s review limited to the irregularities listed 182
5.1.2 The two-step test exercised by the courts faced with challenge 183
5.1.3 The high threshold for the irregularity to amount to substantial injustice 185
5.1.4 Remedies at the court’s disposal 186
5.2 Selected “irregularities” relevant in the context of the arbitral tribunal going beyond the parties’ requests 189
5.2.1 Breach of general duties of the arbitral tribunal 189
5.2.2 Excess of powers 192
5.2.3 Failure to deal with all the issues that were brought before the arbitral tribunal 195
5.2.4 Uncertainty or ambiguity as to the effect of theaward 198
6 “Appeal on point of law”: a limited safeguard of the system and the arbitral tribunal’s discretion to apply the law 198
6.1 The court’s standard of review when faced with challenge 199
6.1.1 Review based on factual findings made in the arbitral award 199
6.1.2 Remedies at the court’s disposal 200
6.2 Distinctive features of the Section 69 challenge 200
6.2.1 The opt-out character of the system 200
6.2.2 Appeal on point of law not fact 201
6.2.3 Appeal on point of English law only 202
7 The application of a three-headed concept to selected issuesthat might fall outside the arbitral tribunal’s authority 202
7.1 Decisions on parties’ claims 203
7.1.1 Decision on contractual claims 203
7.1.2 Decision on contractual counterclaims 206
7.1.3 Decision on set-off 208
7.1.4 Decision on claims/counterclaims based on torts and pre-contractual liability 211
7.1.5 Decision on newclaims/counterclaims and change of claims/counterclaims 214
7.1.6 Decision not covering all claims/counterclaims 216
7.2 The process of application of law by the arbitral tribunal 218
7.2.1 Determining the method of selection of applicable law 219
7.2.2 Decision on applicable law 221
7.2.3 Ascertaining the content of the applicable law by the arbitral tribunal 222
7.2.4 Application of mandatory rules of law by the arbitral tribunal 225
7.2.5 Decision based on equity or reached ex aequo et bono 228
7.3 Decisions on remedies 230
7.3.1 Decision on damages 231
7.3.2 Decision on specific performance 233
7.3.3 Decision on contract adaptation and filling of gapsin the contract 235
7.4 Decisions accessory to the parties’ main submissions and the merits of the case 238
7.4.1 Decision on interest 238
7.4.2 Decision on costs 241
7.4.3 Decision on procedure 242
8 Concluding remarks 244

V The United States and the Federal Arbitration Act of 1925 249
1 Introduction 249
2 The legal context of international commercial arbitration in the United States 251
2.1 The Federal Arbitration Act of 1925 and its supremacy 252
2.2 State laws and their (marginal) significance 253
2.3 The role of the courts and the organization of the judicialsystem in the United States 255
2.4 The role of the United States Supreme Court in (re)structuring the system of arbitration 257
3 Court standard of review of arbitral awards 258
3.1 Pro-arbitration stand in the context of vacatur 258
3.2 The scope of the court’s review 259
3.3 The remedial powers of the courts 261
4 Limits to the arbitral tribunal’s powers 263
4.1 Agreement to arbitrate 263
4.2 Parties’ (subsequent) submissions 266
4.3 Mandatory rules of public policy character 267
5 The United States standards for excess of arbitral tribunal’s powers 268
5.1 The concept of the “excess of powers” 269
5.2 The notion of“imperfect execution of powers upon the subject matter submitted” 273
5.3 The Restatement’s take on the post-award challenge architecture 276
6 The impact of non-statutory grounds on the Federal Arbitration Act framework: “manifest disregard of the law” and other concepts 277
6.1 Judicially created non-statutory grounds for vacatur 277
6.1.1 Decision in manifest disregard of the law 277
6.1.2 Violation of public policy 282
6.1.3 Arbitrary, capricious and completely irrational awards: the award that fails to draw its essence from the underlying contract 282
6.2 Attempts to judicially expand the “excess of powers” challenge on the federal level 283
7 Application of the United Statesstandard of excess of powersto selected
issues that might fall outside the arbitral tribunal’s authority 286
7.1 Decisions on jurisdictional/threshold issues 286
7.1.1 Decision on the validity and existence of an agreement to arbitrate 288
7.1.2 Decision on the scope of an agreement to arbitrate 291
7.1.3 Decision on arbitrability of claims 294
7.1.4 Decision on class arbitration 296
7.2 Decisions on parties’ claims 297
7.2.1 Decision on contractual claims 297
7.2.2 Decision on contractual counterclaims 299
7.2.3 Decision on set-off 302
7.2.4 Decision on claims/counterclaims based on torts and pre-contractual liability 305
7.2.5 Decision on new claims/counterclaims and change of claims/counterclaims 307
7.2.6 Decision not covering all claims/counterclaims 308
7.3 Process of application of law by the arbitral tribunal 310
7.3.1 Determining the method of selection of applicable law 310
7.3.2 Decision on applicable law 311
7.3.3 Ascertaining the content of applicable substantive law by the arbitral tribunal 313
7.3.4 Application of mandatory rules of law(of public policy character) by the arbitral tribunal 314
7.3.5 Decision based on equity or reached ex aequo et bono 316
7.4 Decisions on remedies 318
7.4.1 Decision on damages in general 318
7.4.2 Decision on punitive damages 320
7.4.3 Decision on specific performance 323
7.4.4 Decision on contract adaptation and filling of gapsin the contract 324
7.5 Decisions accessory to the parties’ main submissions and the merits of the case 325
7.5.1 Decision on interest 326
7.5.2 Decision on costs 328
7.5.3 Decisions on procedure 331
8 Concluding remarks 335

VI The New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards 337
1 Introduction 337
2 Court standard of review at the enforcement stage 338
2.1 Approach favoring enforcement of arbitral awards 339
2.2 The scope of the court’s review 341
2.3 Remedies at the court’s disposal 342
3 Limits to the arbitral tribunal’s “mandate” at the enforcement stage 343
3.1 Agreement to arbitrate 344
3.2 Parties’ (subsequent) submissions 345
3.3 Mandatory rules of public policy character 346
3.4 The relevance of the parties’ consent, their requests and the law: the three keyholes test 347
4 The New York Convention approach to the “excess of mandate” type of challenge 348
4.1 Historical overview 348
4.2 Differences in the authentic versions of the text of the New York Convention 351
4.3 Textual interpretation of Article V(1)(c) of the New York Convention 352
4.3.1 The meaning of the “submission to arbitration” 353
4.3.2 The difference between the “terms” and the “scope” of the submission to arbitration 355
4.3.3 The meaning of “a difference” 357
4.3.4 The meaning of “matters” 358
4.4 Competing defenses: the interplay between the grounds forresisting recognition and enforcement under Article V(1) of the Convention 360
5 Application of the “excess of mandate” type of challenge to selected decisions of the arbitral tribunal 363
5.1 Decisions on parties’ claims 364
5.1.1 Decision on contractual claims 364
5.1.2 Decision on contractual counterclaims 366
5.1.3 Decisions on set-off 367
5.1.4 Decision on claims/counterclaims based on torts or pre-contractual liability 369
5.1.5 Decision on newclaims/counterclaims and change of claims/counterclaims 370
5.1.6 Decisions not covering all claims 371
5.2 Process of application of law by the arbitral tribunal 374
5.2.1 Decision on the method of determining applicable law 374
5.2.2 Decision on applicable law 375
5.2.3 Ascertaining the content of applicable law by the arbitral tribunal 377
5.2.4 Application of mandatory rules of law by the arbitral tribunal 379
5.2.5 Decision reached ex aequo et bono or as amiable compositeur 381
5.3 Decisions on remedies 384
5.3.1 Decision on damages 384
5.3.2 Decision on specific performance 388
5.3.3 Decision on contract adaptation and filling of gaps 388
5.4 Decisions accessory to the parties’ main submissions 389
5.4.1 Decision on interest 390
5.4.2 Decision on costs 391
5.4.3 Decision on procedure 392
6 Conclusions 393

Part II
VII The Comparative Law Analysis 399
1 Preliminary remarks 399
1.1 Setting the scene 399
1.2 “If it ain’t broke don’t fix it” and the legislative timeline 400
1.3 Harmony and divergence: the impact of the Model Law 402
1.4 Apples and oranges: distinctive features of analyzed systems 403
2 Court standard of review of arbitral awards 404
2.1 The pro-arbitration approach of national courts in the contextof the challenge 405
2.2 The scope of the court’s review 407
2.3 Remedies at the national courts’ disposal 409
3 Differentstandardsforthe “arbitral tribunal's mandate” and variations of recourse against its excess 411
3.1 Limits to the arbitral tribunal’s “mandate” 411
3.1.1 Agreement to arbitrate 412
3.1.2 Parties’ (subsequent) submissions 413
3.1.3 Mandatory rules of public policy character 414
3.2 The analysis of different concepts of “mandate”, “mission”, “powers”, “authority” 415
3.2.1 The notion of “mandate” and “mission” 415
3.2.2 The notion of “powers” 416
3.2.3 The notion of “authority” 418
3.3 Different approaches to the “excess of mandate” type of challenge 418
3.4 The place of the “excess of mandate” type of challenge in the post-award architecture of selected systems 420
4 The application of different standards of the “excess of mandate” type of challenge to selected issues that might fall outside the arbitral tribunal’s adjudicative authority 423
4.1 Decisions on jurisdiction 423
4.2 Decisions on parties’ claims 424
4.2.1 Decision on contractual claims 424
4.2.2 Decision on contractual counterclaims 426
4.2.3 Decision on set-off 427
4.2.4 Decision on claims/counterclaims based on torts and pre-contractual liability 429
4.2.5 Decision on newclaims/counterclaims and change of claims/counterclaims 430
4.2.6 Decision not covering all claims/counterclaims 432
4.3 Process of application of law by the arbitral tribunal 434
4.3.1 Determining the method of selection of applicable law 434
4.3.2 Decision on applicable law 435
4.3.3 Ascertaining the content of applicable substantive law by the arbitral tribunal 436
4.3.4 Application of mandatory rules of law(of public policy character) by the arbitral tribunal 437
4.3.5 Decision based on equity or reached ex aequo et bono 439
4.4 Decisions on remedies 440
4.4.1 Decision on damages 440
4.4.2 Decision on specific performance 442
4.4.3 Decision on contract adaptation and filling of gapsin the contract 442
4.5 Decisions accessory to the parties’ main submissions and merits of the case 443
4.5.1 Decision on interest 444
4.5.2 Decision on costs 445
4.5.3 Decisions on procedure 448
5 Comparative assessment 451
5.1 Leading similarities and differences 451
5.2 Explaining the similarities 455
5.2.1 The harmonizing effect of the New York Convention and the UNCITRAL’s undertakings 456
5.2.2 The importance of party autonomy in structuring the adjudicative mandate 457
5.2.3 The tribunal’s autonomy: the significance of the arbitral tribunal’s managerial toolbox 458
5.3 Explaining the differences 459
5.3.1 The ongoing competition between the leading arbitral centers 459
5.3.2 Historical development and legal heritage 460

VIII Conclusions and recommendations 463
1 Conclusions 463
1.1 Preliminary observations 463
1.2 Pro-arbitration standard eliminating the possibility of review on the merits 463
1.3 Two dimensions of the “tribunal’s mandate” and limits that might be exceeded 464
1.4 The use of the “mandate” in statutory frameworks in the analyzed legal systems 466
1.5 Possible difficulties in selecting appropriate grounds to challenge awards on the basis of “excess of the tribunal’s mandate” 466
1.6 Availability of the “excess of mandate” type of challenge against the tribunal’s decisions on claims 467
1.7 Availability of the “excess of mandate” type of challenge to the process of application of law 468
1.8 Availability of the “excess of mandate” type of challenge to tribunal’s decisions on remedies 469
1.9 Availability of the “excess of mandate” type of challenge to tribunal’s decisions accessory to the parties’ mainsubmissions 470
1.10 Application of the “excess of mandate” type of challenge to the tribunal’s procedural decisions 470
1.11 Looking at the concept of the tribunal’s mandate through lenses of the post-award challenge against its excess 472
1.12 Potential changes in the shape of the arbitral tribunal’s mandate 472
2 Recommendations 473
2.1 Recommendations for parties 473
2.1.1 Shaping the mandate 473
2.1.2 Exclusion agreements 474
2.1.3 Inclusion of the appeal mechanism 476
2.2 Recommendations for arbitrators and judges 476
2.2.1 Active participation of the tribunal in structuring the mandate 476
2.2.2 Following “no review on the merits” approach by judges 477
2.3 Recommendations for legislators/the UNCITRAL 477
2.3.1 Abolishing the reference to the tribunal’s mandate at the post-award stage 478
2.3.2 The Swiss model 478
2.3.3 The “van den Berg formula” 479
2.3.4 The UNCITRAL Recommendation regarding the interpretation of its instruments 482
3 Directions for further research 483
4 Concluding observations 484

Annexes 485
List of cases 489
References 507