Explaining Why You Lost: Reasoning in Arbitration

Antonio Crivellaro, Mélida N. Hodgon (Eds.)

Authors: Charles Jarrosson, Mohamed S. Abdel Wahab, S.I. Strong, Anja Ipp, Luca G. Radicati di Brozolo, Teresa Giovanni B., Giuditta Cordero-Moss

ICC Institute Dossiers XVIII, 2020, 140 pages

ISBN: 978-92-842-0561-5

Available at https://2go.iccwbo.org

The Dossier XVIII of the ICC Institute of World Business Law (‘ICC Institute’) addresses reasoning in international arbitration, which was the subject of the 39th Annual Conference of the ICC Institute that took place on 17 December 2019, in Paris.

In his foreword, Yves Derains explains that the title of the Dossier is justified by the fact that the losing party is usually more interested than the winning party in understanding the reasons of the decision rendered by the arbitrators.

Antonio Crivellaro (Founder of Arbitration Practice, Bonelli Erede, Milan; Council Member, ICC Institute), in his introduction to the Dossier, reminds us that the requirement of reasoning in an award is generally regarded as a widely accepted and recognized principle. The discussion should instead focus on ‘what adequacy standard the reasons should meet’. The Editor proposed a checklist of prerequisites that an award should meet to qualify as ‘adequately reasoned’. An express and thorough reasoning is the only mean to check that arbitrators safeguard due process and avoid arbitrariness. Reasoning, coupled with the increasing tendency toward publication of awards, may also contribute to guidance of arbitrators in future cases and improve the law by making decisions in comparable situations available to practitioners.

Charles Jarrosson (‘Chapter 1: Reasoning in Arbitration’) states that, if the rule nowadays is ‘the obligation for the arbitrators to state reasons in their awards’, it comes from current international laws and conventions and the evolution of the due process concept that now clearly includes ‘the duty to state reasons’. The meaning of ‘stating the reasons’ may vary depending on the type of awards or the context. To the question ‘why should one give reasons’, the author notes that ‘there are as many answers as there are recipients’: the arbitrator, the parties, the arbitration institutions and the judge with powers of judicial review. As to review by the courts, the author makes a distinction between the review on the ‘existence of reasoning’ and the review on the ‘relevance of reasoning’, the latter being generally excluded, and the related sanctions, especially leading to the setting aside of the award.

Mohamed S. Abdel Wahab (‘Chapter 2: Judicial Review and Reasoning of Arbitral Awards, Perspectives from Africa and the Arab World’) provides an overview of the reasoning requirement in Africa and the Arab World. Most of the jurisdictions in that area are either directly influenced by the UNCITRAL Model Law or the Organization for Harmonization of Business Law in Africa (OHADA), both of them including the reasoning requirement. Then the author observes that the scope, characteristics, categories and limits of reasoning vary from one jurisdiction to another. Globally, it can be underlined that ‘extensive judicial review of arbitral awards is in regress and amity towards arbitration … on the rise’. The author concludes that ‘the reasoning of awards in African and Arab jurisdictions is generally aligned with the best practices internationally’.

S.I. Strong (‘Chapter 3: Legal Reasoning in International Commercial Disputes, Empirically Testing the Common Law-Civil Law Divide’) recently conducted a survey on legal reasoning in commercial disputes on a panel of 455 judges and arbitrators and used the findings of her survey to test the longstanding theoretical assumption about alleged differences between common law and civil law reasoning. The survey ‘confirms a number of the theoretical assumptions about the motivations behind reasoned rulings and demonstrates a high degree of consistency across the common law-civil law divide’. It also confirms the standard theoretical understanding on how legal authorities are respectively used by common law and civil law practitioners.

Anja Ipp (‘Chapter 4: Show, Don’t Tell: Creative Writing for Arbitrators’) pleads for refreshing the drafting of awards. Referring to the freedom left to the arbitrators for their reasoning in their awards, she encourages them to be more innovative and creative. ‘Arbitrations are stories’: from that assumption, the author proposes three ‘key principles of storytelling’ that could serve arbitrators in the award writing:

  1. ‘Think about the reader’, especially the losing party that would be less inclined to apply for setting aside the award if it can understand why it lost.
  2. Structure in three acts: (i) the set-up of the case, (ii) the confrontation of respective positions and relevant analysis by the tribunal, (iii) the resolution and final decision by the tribunal.
  3. ‘Show, Don’t Tell’: the analysis to show the readers how the tribunal reached its conclusion.

Luca G. Radicati di Brozolo (‘Chapter 5: Reasons in International Commercial and Investment Arbitration Awards, How Much and How?’) is focusing on the technique of drafting an award: ‘what and how to say things’? After going through the preliminary parts of the award (procedural history, facts and arguments of the parties), the author deals with the reasoning part and asks the question whether the arbitrators shall ‘stick to the bare minimum that allows them to come to a decision or to expand their reasoning’. The answer may vary according to the situations and a certain number of factors. The author also elaborates on whether the arbitrators should refer to matters or arguments not or hardly raised by the parties. He concludes that ‘arbitrators need to use their broad discretion well and to strike a delicate balance between saying too much and saying too little’.

Teresa Giovannini B. (‘Chapter 6: Reasoning in Arbitral Awards: Why? How? Control and Sanction under Swiss Law’) replies to following questions:

  1. ‘Why’ is the requirement for reasoning is important?
  2. ‘How’ can the requirement be met?

The answer to the first question encompasses the duty of the arbitrators to the parties (‘What are the users entitled to?’), the satisfaction of due process, and the purpose of scrutiny of the awards. Answering the second question, the author insists on the need of transparency and consultation of the parties on ‘the key questions to be decided and the methodology by which the decisions must be arrived’. The author addresses how Swiss courts may sanction an unsatisfactory reasoning.

Giuditta Cordero-Moss (‘Chapter 7: Reasoning in Arbitration, What Do Users Want or Need?’) examines ‘the requirements that awards have to meet in order to resist court scrutiny’. The author first notes the tension between the principle that the courts should not review the merits of an award and their power to set it aside (pursuant to the law of the seat of arbitration) or refuse its enforcement (pursuant to the New York Convention). She then underlines the link between court control and arbitrability, and the need for reasoning in the award on issues for which the court may not be bound by the tribunal’s reasoning, such as jurisdiction, conformity to the public policy, or choice of governing law (if different from the law chosen by the parties). The author does not believe that efficiency (and the development of expedited procedures) justifies minimal reasoning. Finally, she proposes some standards for reasoning in the awards.

Mélida N. Hodgon (Partner, Jenner & Block, New York; Vice-Chair, ICC Institute) concludes from the excellent contributions in this Dossier that ‘it may be time to outline certain basics standards for reasoning’.