Arbitration, whether international or domestic, is an institution of private justice aimed at settling disputes.¹

The two focal points of any study of the relationship between arbitration and Community law are the following:

• arbitration, which is an expression of the will of the parties, provides a non-judicial means of settling disputes. This "otherness" of arbitration is the source of its distinctive characteristics and raises the question of its place and role in the application of the law;
• but, although it off parties a non-judicial alternative for settling their disputes, arbitration cannot be outside the law, since it is necessarily embodied in a legal system: it is subject to international public policy and mandatory public order legislation.

Whilst international arbitration has become the international business community's commonest method of settling international commercial disputes,² international law relating to commercial or business relationships has itself become an increasingly regulated area of law (rules relating to competition, trade, and investments). These rules are aimed at countering practices which are detrimental to the normal interplay of competition or free trade, and hence prejudicial to individual rights and the general interest.

As a consequence, the relationship between arbitration and the law, arbitral tribunals and national courts - a classic subject if ever there was one - has evolved, although there has been a certain time lag corresponding to the need for time for reflection and assimilation. The relationship has changed from conflictual to dialectic or even complementary.³

The relationship between arbitration and Community law, between arbitrators and the Court of Justice of the European Communities (CJEC) is in keeping with the same development. Through its supremacy and its direct effect Community law forms an integral part of the law of each Member State and, as such, can and must be applied by arbitrators. Through the intermediary of the preliminary ruling procedure under Article 177 of the Treaty establishing the European Community (EC) - a procedure applying to judicial relationships that presaged the principle of subsidiarity sanctioned by Article 3B of the Maastricht Treaty - these fundamental principles have been implemented by the courts of the Member States. These courts have thus come to exercise a general judicial function in relation to Community law, and their task and duty have been consistently restated by the Court of Justice.⁴

Two subjects for reflection emerge from this:

• arbitration and preliminary rulings; and
• the arbitrability of Community law.

These issues are well known, but it is useful to recall them in order to set the parameters of our joint reflection.⁵

I. Arbitrators and the Court of Justice

Article 177 EC provides that issues may be referred to the CJEC for preliminary rulings by "any court or tribunal of a Member State (…) if it considers that a decision on the question is necessary to enable it to give judgment." The very wording of this provision establishes that the national instance of referral must be a body imbued with full judicial authority.⁶

However, the Court of Justice has not derived the criteria for identifying what constitutes such a body from the wording of the treaty. In reserving the right to question the Court on the interpretation and validity of Community law to such judicial bodies alone, the intention of the Treaty's authors was to exclude any direct referral by parties, the Member States and the Community Institutions.⁷ When issues have been referred to the Court of Justice by national authorities of a judicial nature or ones assuming certain characteristics of courts, the Court has been led to determine whether it has jurisdiction by establishing the judicial status of the national authority that referred the question to it. In this connection it has based its decision on a range of indices some of which are more significant for arbitrators than others.

1. Case law precedents of the Court of Justice

1.1 In case 61 /65 Vaassen-Gobbels, a claimant for sickness benefit applied to the relevant arbitral tribunal with jurisdiction over disputes between mining employees or their successors and a Dutch social security fund.

The tribunal in question was not composed of professional magistrates or even lawyers and its decisions were only enforceable after endorsement by the civil courts on the initiative of the person concerned. These special features which, it is true, are common in the social security sector – did not however prevent the Court of Justice from finding that it had jurisdiction to make a valid ruling, on the basis of the following criteria:

• the tribunal's legal origin, in other words the fact that the rules of the private fund which set up the tribunal had to be approved by the supervisory ministerial authorities and its members were appointed by the Minister for Mines;
• its permanent nature;
• the fact that it was the obligatory dispute­ settlement body for members of the fund;
• the application of the law and the principles of judicial procedure, particularly the rules of due process.⁸

Two comments are essential.

1. The collection of criteria ensuing from this case can be explained by the Court's need to base its decision on principles that were common to the different Member States' judicial systems. Hence its aim was to prevent the definition of what constitutes a judicial body from giving priority to one particular nation's concept of such a body, a concept totally at odds with that of another Member State.⁹ As the Court stated in its judgmentC-24/92 Corbiau “the concept of a judicial body implies a Community dimension."¹⁰

Thus, in case 246/80 Broekmeulen, the Court of Justice held that an authority which the law of the Member State did not consider to be a judicial body – in this case a commission to which doctors could appeal against decisions of the professional body under whose aegis they practiced – in fact constituted a judicial body. In reaching its decision, the Court of Justice underlined that not only did the authority in question operate under a certain administrative supervision, but also that in practice it constituted the only means of appeal against decisions of the professional body relating to Community law.¹¹

The criteria thus laid down constitute the standard of reference for determining whether the authority of referral constitutes a judicial body. Moreover the Court of Justice has added a further requirement to these criteria, that of independence, rejecting a request for a preliminary ruling submitted by an administrative body to which matters were referred on a voluntary basis, despite the fact that the Council of State of Luxembourg had defined it as a court.¹²

2. Although these criteria for defining the notion of a judicial body are cumulative, the one cited last clearly has a different significance for arbitration. There is no need to emphasize that arbitral awards apply the law in the context of procedures in which respect of the rules of due process is guaranteed; it has thus been possible to underline the extent to which arbitral and judicial functions are tending to get closer and support one another.¹³

The three other criteria - legal origin, permanent nature and obligatory character - delineate the difference between arbitral institutions and judicial bodies and constitute the basis of the decision rendered by the court in the Nordsee case.

1.2 The Nordsee case¹⁴ stemmed from a dispute between a number of German firms relating to modalities they had agreed for sharing community subsidies between them, and in relation to which they had provided for an arbitration procedure in the event of dispute. As the arbitrator considered that the resolution of the dispute depended on the interpretation to be given to Community law, he referred the matter to the Court of Justice. In the reasons for his request for a preliminary ruling, the arbitrator set out the factors which in his view mitigated in favour of the application of Art. 177 EC: characteristics of a judicial body, in particular the fact that in this case it had been appointed by the Bremen Chamber of Commerce following the parties' failure to agree, and the need for a uniform application of Community law.

The Court of Justice itself pointed out that the activity of the arbitral tribunal allowed "certain comparisons with judicial activity" since it was organised within the framework of the law, and the arbitral awards were decided in accordance with the law, had res judicata authority between the parties, and were enforceable with the approval of the ordinary courts (point 10 of the Judgment).

However, as indicated above, while these elements are indeed necessary if an authority applying for a preliminary ruling is to be defined as a judicial body, they are not sufficient. In fact, the three essential factors specified above - namely, the legal origin, obligatory character and permanent nature - were missing. Indeed, the Court of Justice referred to these missing criteria impliedly by underlining:

• that as a result of an arbitration clause inserted in their agreement, the parties "were free to leave the settlement of any disputes between them to the ordinary courts or to choose arbitration" (point 11),
• that the public authorities of the Member State were "not involved in the choice of arbitration and were not called to intervene in the course of the procedure before the arbitrator of their own initiative" (point 12).

As a result the Court concluded that "the link between the arbitral procedure and the organisation of the Member States' legal means of recourse was not sufficiently close" for the arbitral tribunal to be classed as a "court or tribunal" within the meaning of Art. 1 77 EC (point 13).

Accordingly the Court's decision was grounded on the specific features of the arbitral institution: the decisive factor was the autonomy of the will of the parties. Thus, the Court held in a subsequent judgment in order to establish the nature of a judicial body that "the arbitrator's jurisdiction does not depend on the parties' agreement" nor does its composition.¹⁵

But the parties' freedom does not permit them to elude the obligation to comply with Community law. This was the situation in this case, where they infringed Community regulations relating to the non-transferability of subsidies. Hence although parties are free as to the manner in which they settle their disputes, they are not free to disregard the mandatory rules of Community law, any more than Member States themselves are. That is why the Court of Justice underlines in the Nordsee case that the ordinary courts have responsibility in this connection when they have to deal with arbitration either in the context of the assistance they provide to arbitral tribunals, or when they are involved in supervising awards (recourse for cancellation, enforcement procedure or any other recourse).¹⁶

2. Comments on the Nordsee decision

2.1 As we have tried to demonstrate, the Nordsee decision falls into the context of a whole series of consistent decisions since its premises were laid down in 1965 in the Vaassen-Gobbels decision. It is not a question of an isolated decision, as is demonstrated a contrario by the Danfoss judgment cited above, but a judgment of principle which far from casting any judgment on arbitration excludes it from the preliminary ruling procedure on the ground of its specific characteristics.

In this connection it is significant that in the Court's mind, the responsibility that it vests in the national courts – namely, to exercise a supervisory function which it cannot assume itself is based on the need to ensure that parties comply with the law, in other words to counter any misuse of arbitral procedure by parties with a view to avoiding Community obligations, and not on the risk that arbitrability of Community law would engender.

2.1.1 The judgment rendered by the Court in the case C-39 3/92 Commune d'Almelo¹⁷ fully confirms this analysis.

The national dispute concerned conditions relating to competition between local and regional electricity distributors in The Netherlands. In accordance with the general conditions of the distribution agreement, the dispute was in the first instance brought before an ad hoc arbitration commission composed of arbitrators nominated by the parties, and subsequently before the ordinary appeal court, namely the Gerechthof in Arnhem ruling in this case as amiable compositeur pursuant to the arbitration agreement concluded between the parties.

The national court referred to the Court of Justice various preliminary questions relating to the compatibility of the agreements concluded by the parties with Articles 85, 86 and 90 of the EC Treaty, but as a preliminary issue its status as a judicial body within the meaning of Art. 177.

Recalling the Court's established case law, Advocate General Darmon pleaded in the affirmative. He pointed out as follows:

• that the authority of appeal against the arbitral award was the judge who would normally have jurisdiction in the absence of an arbitration clause;
• that Dutch law contains a mandatory provision stipulating that the authority of appeal must be a national court, when the parties have provided for appeal against the arbitral award in an arbitration clause,¹⁸ and
• that the fact of acting as amiable compositeur does not in any way prejudice its status as a judicial forum or impede the application of Community law. The supremacy and uniform application of Community law lead to the mandatory application of the provisions of the treaty in general and the rules of competition in particular. Moreover, the result cannot be modified either by the contractual or legislative context of the particular case or by any applicable judicial or legislative procedures at national level. This is particularly so in as much as the relevant judicial body is charged with the task of handing down its findings on questions of law. ¹⁹

The Court of Justice accepted all the points of the Advocate General's reasoning, underlining in particular that the nature of the jurisdiction was not modified because of the circumstance that the court to which the matter was thus referred was ruling as an amiable compositeur pursuant to the parties' agreement. Indeed, the court is bound to comply with Community law, in particular competition law, through the combination of its supremacy and uniform application and the duty of cooperation imposed on every Member State by Article 5 of the EC treaty. ²⁰

2.1.2 There are many lessons to be learned from this case. It confirms that the institutional criterion prevails. The court of appeal, even when it is ruling as amiable compositeur pursuant to the arbitration agreement, is imposed on the parties by the law. It also underlines that the fact that Community law, and even Community competition law, may be subject to arbitration presupposes that it will be fully complied with.²¹

Indeed it is the link with the public authorities that determines access to the preliminary ruling procedure, hence a formal or "organic" criterion, rather than the material or "functional" need to guarantee a uniform or homogeneous application of Community law. Reading the opinions of academic lawyers reveals that although this approach has been subject to discussion, it nonetheless seems justified by the particular features of the arbitral institution.

2.2 Could the Court of Justice go further

It has been asserted that the function of the referral authority should prevail over its status.²² It has also been emphasized that the requirement of uniformity should have led the Court to extend its jurisdiction to arbitration cases (such was the position of the arbitrator who referred the question to the Court in the Nordsee case). This requirement is in fact the very basis of the preliminary ruling procedure, whose full potential has been developed by the Court of Justice, in numerous cases, by entrusting the national courts with the task of ensuring compliance with Community law, including situations in which legislation and constitutional courts adopt a contrary position.²³

Hence simply by providing for the possibility of indirect supervision by the interposition of a judicial forum, the Court would not have derived all the consequences of a mandatory rule which is a constant theme of its established case law. This paradox can be clearly illustrated by the judgment in the Commune d'Almelo case which underlines the requirement of compliance with Community law even when the decision is taken on the basis of amiable composition, but where the monitoring of any preliminary issues is dependent on the hazards of an indirect reference.

It has also been asserted that this functional viewpoint is justified by the similarity or even the ever-increasing equivalence between dispute settlement methods whether by arbitration or by the courts, especially with the emergence of international arbitration as the usual method of settling commercial disputes.

The Commune d'Almelo case thus seems to illustrate the increasing overlap between the process of arbitration and the judicial process that can be observed. Indeed it indicates that when arbitration is as it were institutionalised, the way is open to the preliminary ruling procedure under Art. 1 77 EC. Yet, can it not be maintained that the difference between the situation decided in the Commune d'Almelo case and the outcome resulting from a law which provided that any appeal against the arbitral award would be decided by an arbitral tribunal ruling in law but constituted by the parties, thus becomes purely a matter of form, a fortiori if the parties' choice solely concerns the identity of the arbitrators? As the Commission pointed out in its comments on the Nordsee case, the parties did not create the arbitral tribunal's jurisdiction, but made use of it, since it was up to the Member State's legal system to institute it, recognise its authority and authorise it to render valid decisions.

2.2.1 Nonetheless there are limits to the functional approach, stemming from the very nature of arbitration which is the product of the parties' wish to exclude the involvement of the national courts.²⁴

Thus, in his opinion in the Nordsee judgment, Advocate General Reischl noted that allowing arbitrators to use the preliminary ruling procedure would:

• either be superfluous in the case of the legal systems of those Member States which provide for extensive supervision of arbitral awards, since in this case the supervisory courts would be able to make use of Art. 177 EC;
• or would run counter to the fact that certain legal systems exclude or severely restrict judicial supervision of arbitral awards.

Moreover, this latter tendency has grown, with reforms in arbitration legislation in the United Kingdom, France, Germany and The Netherlands aimed at reducing parties' opportunities for appeal against arbitral awards to the courts, restricting such appeals to rare cases of infringement of the rules of international public policy. This probably corresponds to the concern to ensure that arbitral awards are as effective as possible.²⁵

Reference has also been made to the necessary confidentiality that parties seek in resorting to arbitration, and that the publicity of the procedure and the preliminary ruling would run counter to this, as well as the risk of an unwilling party to the arbitration using – or rather misusing – this procedure as a delaying tactic.

Certain observers have also pointed out the danger that recourse to Art. 177 EC might lead to a flow of arbitration away from the Community. Even if the real extent of such a risk is doubtful, it is evidence of the significant trend towards greater autonomy of arbitration referred to above.

In this sense, there has been extensive discussion of the guarantee that the possibility of indirect referral by the court supervising the arbitral award provides. In the first instance such indirect referral comes up against the general arguments against the preliminary ruling procedure applying to arbitration, referred to above.

Moreover, indirect supervision would be unnecessary, as compliance with international public policy is adequately provided for by the established case law of the Member States which is very similar.²⁶ The commonest criticism concerns the risky, complicated and expensive nature of this type of procedure, whereas even the United States Supreme Court has taken the lead by holding that American anti-trust law is arbitrable.²⁷ It should also be pointed out that a decision of the Court of Justice declaring an arbitral ruling to be contrary to Community law would merely oblige the national court to set aside the arbitration without it being able to act as a substitute for the arbitration, and this would constrain the parties to refer the case to the arbitrators once again.²⁸

2.2.2 There seems to be very little justification for such criticisms.

The indirect judicial supervision established by the Court, and strongly restated in its very recent decision in the Commune d'Almelo case, is coupled with the possibilities of direct control provided by the national laws themselves, neither more nor less. The indirect application of the preliminary ruling procedure to arbitration is a direct function of the degree of judicial supervision over arbitration. Here the Court is in tune with - and listening out for - the national legal systems in their relationship with arbitration.

Yet, as we have seen national laws in this field have rather tended to develop towards slackening the controls, and this may explain the very limited number of cases of preliminary ruling procedure in relation to arbitration: the fears that this form of indirect supervision could have constituted a type of procedural subterfuge have turned out to be groundless.

This instrument of indirect supervision is necessary and it seems an adequate means of safeguarding compliance with Community law without altering the very nature of arbitration.²⁹ It is based on the responsibility of the national courts which, to use a well-established expression, exercise a general judicial function in relation to Community law. It is possible to think that the limited number of applications for preliminary rulings in relation to arbitration is a reflection of the limited number of grounds for annulment that might be derived from Community law.

In this context, it is interesting to note that the Court has targetted its case law towards greater selectivity in its acceptance of cases for preliminary rulings. For example it has refused to deal with preliminary questions raised in the context of a fictitious dispute.³⁰ A new trend is to avoid preliminary questions when they relate to acts that are not yet established or where the procedure before the court of referral is closed, or again because the question bears no relation to the reality of the principal claim.³¹ In fact, the Court of Justice considers that to obtain a useful interpretation, the authority of referral should set out the following matters in its request to the Court of Justice: the facts, national legal issues that are already settled, and the grounds justifying the use of the preliminary ruling procedure for settling the dispute submitted to the national court. Indeed, the Court of Justice has pointed out that although the preliminary ruling procedure is based on cooperation with national courts, this cooperation implies that the national judge takes account of the function of the Court of Justice, in other words the administration of justice rather than the formulation of legal opinions on general and hypothetical questions.³²

Thus the established case law of the Court of Justice appears to be a compromise between the "otherness" of arbitration, which makes it a dispute settlement instrument essentially situated outside the judicial system, and the supremacy of Community law, which is imposed on any arbitrator and whose guarantor is the national courts through the means of action provided by their domestic procedural law.

II. The "arbitrability" of Community law

Most laws now follow a liberal approach based on what rights and obligations shall be legally enforceable or the fact that the questions at issue concern rights and obligations relating to assets. This means that they are also based on the concept that rights in respect of which the parties may freely make whatever provisions they wish may be submitted to arbitration.³³ However, this does not make it legitimate for parties to abuse such freedom. Here the arbitrator has a duty in the very interest of the parties - if they wish to have the award enforced - to draft the award in compliance with international public policy and the mandatory public order provisions or sovereign laws.

In the case of international arbitration, international public policy - a more restrictive concept than public policy for domestic arbitrations - is limited to the minimum in that patent infringements of the basic principles of law are penalised (abuse of rights, good faith, pacta sunt ..., parties' equality of treatment and right to be heard).³⁴

Moreover, arbitrators cannot disregard the mandatory standards laid down in the public interest whose application is independent of the will of the parties: trade regulations, exchange control, rules relating to prices, competition, customs and taxation for example. True, all such laws of immediate application or public order regulations do not necessarily form p art of international public policy, but the arbitrator has a duty to fulfill his task and hence to ensure that the parties will be able to enforce the award:

"in order to preserve the legitimacy of their decision-making process as a basic prerequisite for worldwide enforceability of their decisions, the arbitrators cannot totally ignore the will of these national legislatures which stands behind the mandatory norms of domestic law." ³⁵

The "arbitrability" of Community law comes within the scope of these fundamental constraints.

While the Nordsee and the Commune d'Almelo decisions illustrate the arbitrability of Community law, including competition law, they also highlight the Court's wish to ensure that mandatory Community standards are fully complied with and reveal in p articular the supremacy and uniform application of Community law.

Thus, the fact of ruling as an amiable compositeur or in equity cannot lead to the exclusion of the application of Community competition rules, since compliance with these rules is mandatory.³⁶

Indeed, it is in the field of competition that the question of arbitrability has been raised the most markedly. However, other fields of Community law where arbitration might be concern - some of them more recent - deserve attention because of their innovative character.

1. Community competition law and arbitration

Disputes in the field of competition are arbitrable as a result of the fact that property rights are generally at stake. For all this, not everything is arbitrable, in view of the public policy system set up by the Community for safeguarding the protection of the rights of undertakings and hence ensuring freedom of competition in accordance with the provisions of the Treaties and the implementing legislation that has applied them.

In his introductory report to the ICC's studies on arbitration law and competition, L. Idot observed that the participants were unanimous on the subject of the public policy nature of the competition laws examined, deemed to be a set of mandatory rules.³⁷ The established case law of the Court of Justice cited above follows the same logic. Community competition law is a fundamental instrument of Community integration without which the freedom of trade which underlies the single market set in place in 1993 would be undermined or circumnavigated by anti-competitive practices. As the Court has underlined, arbitration agreements are bound to give way in the face of the supremacy and uniform application of Community competition law.

Yet, since it forms part of the Member States' respective legal systems, Community competition law can impinge on any arbitral dispute just as easily as the law governing the dispute, particularly when the effects of the anti-competitive behaviour are localised in the Community market whose trade they affect.³⁸

It will also be taken into account if, during a recourse for cancellation of the award or in the course of enforcement proceedings, a party asserts that the award infringes Community law. Even in a case where the arbitration is based on a law other than Community law, if he intends his decision to be fully satisfactory and enforceable in the Community, the arbitrator must of necessity incorporate the application of Community law.

According to certain authors, for the same reasons, the arbitrator should even apply Community law on his own initiative. When Community competition rules constitute the actual subject-matter of the dispute the direct effect of these rules is imposed on the arbitrator just as it is on any person to whom Community law applies. In consequence the arbitrator should decline jurisdiction if for example he is asked to rule contra legem by declaring that a restrictive practice contrary to Article 85 EC is valid, and more generally if he is asked to decide an issue that Community law stipulates falls within the exclusive jurisdiction of the Community authority. Hence arbitrators are certainly not required to refrain from applying Community competition law, but rather to show maximum vigilance in applying its rules.³⁹

This still leaves arbitrators with a wide scope for intervention. Although the Commission alone is entitled to ascertain an infringement of competition rules and to rule on any exemption, the parties may in fact assert their individual rights by maintaining that certain agreements are null and void or that particular prohibited behaviour is unlawful, or indeed that certain agreements that fall under block or individual exemptions are valid or should be granted negative clearance.⁴⁰

1.2 The Commission is the institution responsible for policing Community competition, in accordance with the conditions laid down by General Council Regulation 17/62 and more recently by the Regulation relating to concentrations No. 4064/89.⁴¹ Its jurisdiction in this field is another source of possible restriction for arbitrators, since matters that fall within the Commission's exclusive jurisdiction should normally not be arbitrated.

There is nothing surprising in this. In systems like Community law, which are based on the prohibition of certain anti-competitive practices, the arbitrator cannot interfere with the specialised authorities' exclusive jurisdiction insofar as this would involve administrative sanctions or decisions relating to exemptions.⁴²

1.2.1 Thus, a decision of the Commission holding that the competition rules (Art. 85§ 1 or 86) have been infringed is binding on the arbitrators and the parties.

1.2.2 Likewise, a decision relating to individual exemption (or negative clearance) decided by the Commission under the provisions of Art. 85§3 in respect of "concerted practices of positive benefit," is not arbitrable, as this is an obvious prerogative of the public authority exercised for the purposes of achieving the objectives of Community competition policy.

What if the notified concerted practice is challenged before an arbitrator on the grounds that it is contrary to Article 85§1, before the Commission has handed down its decision?

One issue has now been settled. The requirement laid down by Art. 9§3 of Regulation 17/62 - that the national authorities cease to have jurisdiction once the Commission has started a procedure - does not apply to courts and as a consequence of this, it does not apply to arbitrators either. In the view of the Court of Justice, the direct eff of Articles 85 and 86 is such that even in this case the judge should fulfil his task of protecting the individual rights that private· parties can derive from Community law, and that, if he deems it necessary for reasons of legal security, the judge may either postpone his ruling or may continue with the case if he considers that there has clearly been no appreciable infringement of the play of competition or of trade between Member States or that the incompatibility is patently evident.⁴³

The arbitrator will therefore have jurisdiction even if a parallel application is made to the Commission,⁴⁴ but it is essential to underline that, without going so far as to advise postponing a decision, it would be preferable for the arbitrator to await the decision of the Commission which applies directly and erga omnes and accordingly will be binding on him. Indeed, any Community undertaking might assert this before the courts. Similar caution is essential in the case of an interim decision (letter of suspension) or of a claim in respect of which a decision is pending: arbitration is possible, but the effect of the arbitral award will be entirely provisional ...

1.2.3 The situation is different in the case of block exemptions in that the exemption decision is applicable by the national court and hence by the arbitrator. He is thus in a position to assess the situation by reference to the decision in the same way as he would refer to any other element of Community law necessary for settling the dispute submitted to him by the parties.

In this context, the following case should be noted. In determining the appropriate procedure in the event of a dis agreement regarding the confidential nature of a document between the Commission and an undertaking subject to investigation, the Court of Justice disallowed the solution of resorting to an expert or an arbitrator. It based its decision on the wide powers of investigation accorded to the Commission by Regulation 17/62. Since the issue involved is the Commission's basis for action in relation to compliance with the competition rules – a field essential to the smooth-running of the common market – the settlement of disputes regarding confidential communication between a lawyer and his clients can only be dealt with at Community level. Moreover, in any case the Commission's decision may be challenged before the Court of Justice.⁴⁵

Lastly, the Commission's decisions have highlighted its concern to ensure a certain control over arbitral procedure.

In 1980, in connection with the charter of the Centre for Dispute Settlements, adopted in the context of the International Energy Agency's Intern Energy Programme – instituting an arbitral tribunal for disputes resulting from oil supply transactions during crisis periods (emergency allocation system) the Commission had pointed out that Member States that were individual members of the Intern Energy Agency in which the European Community has the status of a mere observer, have no power of exempting an award contrary to Community law, but have to guarantee the application of the charter according to Community law.

The Commission was thus able to prohibit an agreement on the ground of an arbitration clause that it contained, since the arbitration clause might constitute a means whereby the parties could elude judicial control, or might even run the risk of reinforcing the restrictive impact on competition of the agreement in question.⁴⁶

However, these are isolated decisions. Moreover, they call into question less the award itself than the conduct of the parties who comply with it.

More frequently, the Commission restricts itself to asking the undertakings concerned to communicate arbitral awards decided on the basis of the authorised agreement. It does this for the same reasons as those set out immediately above, in other words in order to check that they do not modify the conditions of the exemption laid down by the Commission.⁴⁷ The monitoring of arbitral awards is thus a constant feature of the practice followed by the Commission in that such awards may steer the undertakings' actions in a direction that exceeds the objectives envisaged by the agreement.

2. Other areas of overlap

Apart from competition law, there are other fi where Community law and arbitration may rub shoulders, such as agricultural law.⁴⁸ But what we will examine here are cases where the Community may engage in or be subject to arbitration.

2.1 In this connection the provisions of the treaties instituting the Community provide a limited number of examples.

We are not so much thinking of Art. 18 1 EC which enables the p arties to submit their case to jurisdiction of the Court of Justice pursuant to an arbitration clause contained in a contract governed by public or private law concluded by or on behalf of the Community, a provision that seems to be used infrequently. Rather we are referring to the provisions of Art. 220 EC and certain provisions of the Euratom treaty.

2.1.1 Art. 220 EC provides that so far as necessary Member States must enter into negotiations with a view to securing for the benefit of their nationals, inter alia the simplification of formalities governing the reciprocal recognition and enforcement of judgments and arbitral awards.

The Brussels Convention of 27 September 1968 on the Recognition and Enforcement of Civil and Commercial Judgments was concluded in this connection. Art. 1, paragraph 2, point 4, of the Convention excludes arbitration from its field of application.⁴⁹

However, this does not exhaust the issue. Indeed it is quite legitimate to question whether despite this formal exclusion, arbitral awards could fall under the Brussels Convention indirectly through the intermediary of courts dealing with matters relating to the validity of arbitration agreements or of awards.

The Court of Justice replied in the negative in the M. Rich case,⁵⁰ founding its decision on the specific nature of arbitration. In accordance with the Arbitration Act, M. Rich had applied to the High Court for the appointment of an arbitrator, as the other party had refused to implement an arbitration clause agreed in a contract for the delivery of oil, and the High Court submitted the question of the applicability of the Brussels Convention to the particular case to the Court of Justice.

Advocate General Darmon's submissions focus on the main trends in the development of arbitration and highlight in particular the unifying effect of such international texts as the New York Convention and the UNCITRAL Model Law on the one hand, and the movement towards a much more open attitude on the part of the laws of the Member States, on the other hand. The submissions also show that the exclusion of arbitration from the Brussels Convention stems from the particular characteristics of the convention and from the risks of delaying tactics and "forum shopping."

In its judgment, the Court underlines the raison d'être for the exclusion by referring specifically to the New York Convention, and concludes that it applies to arbitration in its entirety "including procedures instigated before national courts" such as the appointment of an arbitrator, the validity or existence of an arbitration agreement or, more generally, whenever the arbitration is the subject­matter of the dispute in respect of which application of the Convention is sought.⁵¹

2.1 In the context of the provisions of the Euratom treaty relating to grants by the Commission of non-exclusive licences in respect of patents, it is specified that, in the absence of amicable agreement, licences may be granted by way of arbitration either to the Community or to undertakings that ask for them, provided they cover an invention directly linked and essential to the development of nuclear energy in the Community, subject to certain conditions (Art. 17).

In this connection, Art. 18 institutes an Arbitration Committee whose decisions may be subject to an appeal to the CJEC, which has a suspensory effect. The Court confines its examination to the formal validity of the decision and to the interpretation of the provisions of the treaty, and its decisions are enforceable. The composition and organisation of the Committee are laid down by Council Regulation 7/63, and the members are selected by the Court and appointed by the Council.⁵²

2.3 The Lome Convention concluded by the Community and the Member States with the ACP states opens up another field for arbitration.

The fourth convention signed at Lomé on 15 December 1989⁵³ in fact provides that in the case of transnational contracts, the settlement of any disputes between the administration of an ACP member state and a contractor, a supplier or service provider relating to the performance of a contract financed by the European Development Fund shall take place either in accordance with the legislation of the third country where the contract is being performed if the parties so decide, or by arbitration (Article 307).

Decision 3/90 of the ACP-EEC Council of Ministers of 29/3/1990 adopted the general regulations, the general terms and conditions as well as the procedural rules of conciliation and arbitration.⁵⁴

2.4 Derivative legislation has had recourse to arbitration less frequently. The following are examples:

• Regulation 39, of which 08/89 establishing the PHARE and TACIS programmes, Article 25 of the General Conditions applicable to public contracts, provides for the settlement of disputes under the aegis of the ICC Rules of conciliation and arbitration;
• EEC Directive 87/344 harmonising legal protection insurance which, without prejudice to any right of recourse to a court stipulated by the national law, imposes a duty on the Member States to provide for an arbitral procedure or another type of procedure presenting comparable guarantees of objectivity for settling disputes between the insurer providing legal protection cover and the policyholder. It also specifies that the contract of insurance must indicate the policyholder's right to resort to a procedure of this kind and that the insurer must bring this to the policyholder's attention;⁵⁵
• Council Directive 93/7 relating to the return of cultural assets that have illegally left the territory of a Member State, likewise provides a possibility for Member States to organise an arbitration procedure for settling any dispute between the person in possession/holder of the asset, provided the Member State requesting the return and the possessor are in agreement;⁵⁶
• Directive 93/13, aimed at the harmonisation of the laws of the Member States relating to abusive clauses in contracts concluded with consumers,⁵⁷ refers particularly, by way of example, to clauses whose aim or effect is to exclude or impede consumers' resort to court proceedings or other means of recourse, inter alia by obliging consumers to refer such matters solely to a form of arbitration procedure not covered by the legal provisions.

2.5 The arbitration clauses included in various international agreements which the Community and Member States have concluded recently are more significant.

In the context of the Agreement establishing the World Trade Organization, the agreement on pre­shipment inspection aims to lay down a body of rules and procedures guaranteeing that such inspection operation will not be carried out to the detriment of free trade. Article 4 of the Agreement provides for a procedure entrusted to an independent entity for the settlement of disputes between inspection departments and exporters. The independent entity will consist of an equal number of representatives of inspection departments and of exporters and will constitute a panel of three members whose decision is binding on the parties.⁵⁸

In the context of the treaty relating to the European Energy Charter signed on 19.12.1995 in Lisbon, which aims to create a vast market for products in this sector by liberalising trade in goods and services on the one hand and investments on the other hand, an arbitration procedure is organised for settling disputes between investors and contracting parties. It resorts either to arbitration by the International Centre for Settlement of Investment Disputes (ICSID), or to the rules of arbitration of the UN Commission on International Trade law (UNCITRAL), or to the arbitration institute of the Stockholm Chamber of Commerce, at the discretion of the parties in dispute. A similar procedure will probably be set in place in the context of the negotiation of the Wider Instrument relating to procedure applicable to investments currently being negotiated at the OECD.

Conclusions

As we have pointed out, Community law has been said to show a certain mistrust of arbitration. Our view is based on the following: the obligation to communicate arbitral awards imposed by the Community in the context of competition, the exclusion of arbitral awards from the field of application of the Brussels Convention on the recognition and enforcement of foreign judgments, and on the fact that the established case law of the Court of Justice refuses to allow arbitrators to use the preliminary ruling procedure.

It must be assumed that the examples set out above will have demonstrated convincingly that it cannot be a question of mistrust, but rather a matter of taking into account the true nature of arbitration, which is partially the result of the will of the p arties. Moreover, the Community institutions only exercise a limited hold over arbitration: the measures relating to the communication of arbitral awards remain few and monitoring by the Court is still indirect and uncommon. This does not in any way mean that Community law itself is not very present in arbitration. There is not a shadow of doubt that it is arbitrable or in relation to the need to comply with the quasi-existential requirements on which this law is based - supremacy, uniform application and direct effect.

There is no doubt that when one considers the relationship between Community law and arbitration, the most striking feature is that Community law and arbitration only overlap spasmodically at both the procedural and the substantive levels, at least if they are viewed from the standpoint of recourse to arbitration by the Community or appeals against arbitral awards before the Court of Justice.

So far as international arbitration is concerned, B. Oppetit has spoken of a genuine phenomenon of cross-cultural assimilation at the legal level, with arbitration being gradually recognised as the principal means of settling disputes in the sphere of international trade.⁵⁹ How is Community law applied by arbitrators? What types of disputes, what issues crop up the most frequently? Do arbitral awards take account of the case law of the Court of Justice or of the Tribunal of First Instance? The answers to all these questions would provide the means of measuring the impact or the ascendancy of Community law in arbitration and of knowing whether the graft of Community law onto arbitration has indeed taken root, as it has in the case of the national courts.

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