International arbitrators enjoy a considerable freedom in the conduct of the proceedings and in the decisions they make on the merits of the case. Subject to few exceptions, their decisions are final. Although absence of jurisdiction, lack of independence or impartiality, breach of due process, excess of power and violation of international public policy may lead to the setting aside of an award, it is rarely the case of wrong decisions on the merits. There are very few jurisdictions where a superficial assessment of the facts or a misinterpretation of the contract are grounds for setting aside an award. The same applies to an inaccurate application of the law, with the exceptions of some common law countries, such as England and the United States.

Yet, the arbitrators must explain their decisions. The rules of most arbitral institutions, such as article 32(2) of the ICC Rules of Arbitration, require that an award include reasons, although neither under the New York Convention nor under the UNCITRAL Model Law the failure to state reasons constitutes a ground for setting aside arbitral awards. Moreover, article 31(2) of the UNCITRAL Model Law permits the parties to agree that reasons shall not be given. As a result, many national laws inspired by the UNCITRAL Model Law offer the same possibility to the parties, as well as some laws designed independently such as the English 1996 Arbitration Act (Art. 52(4)) or Swiss Law (art. 189(2) LDIP).

However, with the exception of specialized arbitrations such as quality arbitration, where the main task of the arbitrators is to assess the quality of a product, the parties generally refrain to grant the arbitrators the power to render awards without reasons. They are right to do so. Judges do not like awards without reasons and show a certain reluctance to enforce them, even when the arbitrators were permitted not to give reasons. I will never forget the ironic remark of a French judge, more than 30 years ago, invited to order the enforcement in France an award rendered in the US according to the rules of a professional association which did not require that reasons support the awards. The award was three lines long and condemned a party to pay three million dollars. The judge looked at the award and said, with a smile: one million per line! The lack of motivation could not be a ground for refusing the enforcement but it was crystal clear that any weakness in the award or in the proceedings that had generated it would not be treated with much indulgence. Some may be astonished by this attitude, as the control by judges of the reasons given by the arbitrators is very limited. Indeed, the control of the reasons of an award may easily lead to the review of its merits and judges are not authorized to enter into such a review. This would be forgetting that without reasons in the award, the control of due process and in particular of the right to be heard often becomes an artificial exercise. For example, what is the practical purpose of discussing whether the arbitrators could admit a last minute submission by a party without breaching due process if it is impossible to know whether they took it into consideration in their decision?

But it would be wrong to assume that the parties are reluctant to permit the arbitrators to render unreasoned awards just because they are afraid of the judges’ reaction. The drafting of awards play a significant role in the duration of arbitration proceedings, as illustrated by the fact that, although the time limit to render the award under the ICC Rules of Arbitration is six months from the signature of the terms of reference, the arbitrators are expected to submit their draft award for scrutiny to the International Court of Arbitration three months after the hearing or the post hearing brief. This shows that drafting a reasoned award is a time consuming operation. Since the parties, rightly or wrongly, usually complain about the duration of arbitration proceedings, there is no doubt that they have a real interest in knowing the reasons upon which the award is based. Otherwise, they would be satisfied with unreasoned awards which can be drafted very rapidly.

It is usually said that the losing party is more interested than the winning party in understanding the reasons for the outcome of the proceeding. It is probably true and it justifies the title of this Dossier "Explaining Why You Lost, Reasoning in Arbitration". This is based on the reaction of the parties and their counsel when they receive an award. Everybody starts by the last page since nobody is prepared to read two hundred pages before the final decision. On the successful side, once the decision is known, the immediate reaction is to open a bottle of champagne. Reading the reasons may be deferred for rainy days. To the contrary, on the unsuccessful side, all the energy will be put in trying to understand the reasons for the failure. But it is not the end of the story. After sometime, the winning party will come back to the reasons. When applicable, they will want to know why they did not get all they were claiming and, more generally, they will be interested in fully understanding the reasons for their victory and the losing party defeat in order to draw lessons for the future. This explains that, although there is almost no control of the arbitrator’s reasons by courts, that arbitrators have a responsibility towards the parties and towards the arbitration community at large to provide comprehensive reasons for their awards. The publication of awards recently introduced by ICC makes that responsibility even greater.

This Dossier XVIII of the ICC Institute of World Business law contributes to the definition of the extent of that responsibility. It was the object of the discussions held during the 39th Annual Conference of the ICC Institute on 17 December 2019. The program was prepared by two experienced members of the Institute Council, Antonio Crivellaro and Melida N. Hodgson, who were able, with the support of contributors with huge expertise in their respective fields, to cover the various aspects of this fascinating subject and to provide practitioners and scholars with several new paths for reflection.