Ardita Seknaj, the Secretary General of ICC Albania opened the session. The speakers were Sokol Elmazi (Partner, Boga & Associates, Tirana (Albania) and Pristina (Kosovo)), Fatos Lazimi (Lawyer, Halimi, Tirana), Maria Hauser-Morel (Counsel, Hanefeld, Paris) and David Riesenberg (Associate, White & Case, Washington DC), and the event was moderated by Alina Sartogo (Associate, White & Case, London).

In Albania, the arbitration regulation, which was contained in the code of civil procedure (‘CCP’), applied to domestic cases, and limited provisions applied to international arbitration.1 Since 2013, the Ministry of Justice has been working on a new arbitration law: the governmental draft maintains the dual system, which has been questioned by some practitioners who argue in favor of a uniform system.

Choice of an arbitration law regime

The UNCITRAL Model law offers a regime tailored to international commercial arbitration, and the commentary thereto provides that states ‘may consider extending their enactment of the Model Law to cover also domestic disputes’.2 Accordingly, it is for each state to choose its arbitration regime. One of the reasons for the dualist approach adopted in some arbitration laws results from the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (‘NY Convention’) which is relevant for the recognition and enforcement of foreign but not domestic awards. The different treatment of foreign and domestic arbitral awards has triggered the dualist approach in some countries, as reflected in the IBA Arbitration Country Guides.3

In France, a dual regime has its origins in the initial reticence towards domestic commercial arbitration. In the early 20th century, arbitration had mainly developed for international contracts, and still in the early 80s, the commercial code stipulated that disputes arising out of domestic contracts (those that would fall within the competence of the commercial tribunal) could only be arbitrated for specific types of disputes. As such, for domestic dispute resolution, arbitration was an exception to domestic litigation.4 Although today there are more common grounds between domestic and international regimes, the distinction has been maintained.5

In the USA, the Federal Arbitration Act (‘FAA’)6 also distinguishes between domestic and international arbitration (awards falling under the NY Convention). One of the main differences between domestic and international arbitration concerns the post-award phase, i.e. the grounds available for challenging arbitral awards and the limitation periods to seek recognition or enforcement of an award.

There may be national legal traditions that warrant setting forth grounds on which recognition or enforcement of an award may be refused, other than those listed in Article V of the NY Convention, thus creating a dualist system. For instance, in the case of Baker Marine vs. Chevron et al.:

  • Nigerian courts (courts of the seat)7 annulled arbitral awards issued in Baker Marine’s favor on grounds reflected in the NY Convention (such as going beyond the scope of the submissions8) and grounds not reflected in the NY Convention (such as ‘improperly awarded punitive damages’ and ‘incorrectly admitted parole evidence’).
  • Baker Marine then attempted to enforce in the USA the arbitral awards despite their annulment by Nigerian courts. The US Court of Appeals for the Second Circuit confirmed the decision of a district court declining to enforce the awards under Article V(1) lit. e) of the NY Convention.9

This shows one of the real-world consequences of the apparently dualist regime applied by Nigeria: Baker Marine’s arbitral awards had more vulnerabilities to challenge before the Nigerian courts than would have been available if a challenge were first brought under the NY Convention in the US courts.

Practical implications of a dual regime

In France, four notable differences exist between domestic and international arbitration cases.

  1. The arbitration clause. In domestic arbitration, the arbitration clause has to be in writing and indicate the object of the dispute,10 while no such requirement exists for international arbitration. As such, in an international context, an arbitration agreement may be inferred from the tacit acceptance of an arbitration clause contained in sales conditions, as found by the Supreme Court in Bomar.11
  2. The duration of the arbitration. In domestic cases, the procedure is limited to six months from the transmission of the file to the tribunal, unless the arbitration clause provides otherwise, while no such limit applies in international cases. It has been stressed that specific time limits may be prescribed by the parties’ agreement, also by reference to arbitration/institutional rules (such as the ICC Rules, Article 31).
  3. Confidentiality. Domestic arbitration cases are confidential, which is not the case for international cases.12
  4. Post-award phase: For domestic awards, parties can also agree on an appeal (voie d’appel).13 Failing specific agreement, domestic awards, just like international awards, may only be subject to set-aside proceedings (recours en annulation).14

In the United States, the grounds available for challenging arbitral awards vary. For international cases, the only grounds are those listed in Article V of the NY Convention, while for domestic awards, §10 of the FAA contains its own list of possible grounds. Moreover, in domestic cases, for many years, US courts had recognized some form of review for manifest disregard of the law as an additional ground. This manifest disregard doctrine was called into question by the US Supreme Court in 2008 in the case of Hall St. Assocs., L.L.C. v. Mattel.15 In the 2019 Restatement, the American Law Institute took the view that ‘manifest disregard of the law is not a ground for vacating or denying recognition or enforcement of an award under FAA §10.16

The practical implications of a dual arbitration regime also depend on how the law defines the distinguishing criteria. In France, the legislator has opted for an economic approach based on the subject matter: an arbitration is international if it involves international trade interests.17 The French approach is inspired by the Hecht case from 1972, where the Court of cassation relied on the nature of the contract, not the legal qualification of the parties.18 The US legislator defines as international those cases which involve property located abroad, envisage performance or enforcement abroad, or have some other reasonable relation with one or more foreign states.19 The currently discussed Albanian draft Arbitration Act defines domestic arbitration as arbitration with ‘full national elements’ in subject, object and nationality of the parties. It has been suggested that this formulation does not develop clear rules for distinguishing between domestic and international arbitration.

In conclusion, all panelists stressed the importance of the human factor: regardless of how the arbitration law is drafted, the arbitration is as good as the arbitrators, counsel, and the attitude of state courts. As such, having a good arbitration law, whatever the model, is just one of the many ingredients necessary for arbitration to be an efficient tool for resolving disputes.


1
Law No. 8116, dated 29 March 1996 on the Code of Civil Procedure of the Republic of Albania, as amended.

2
UNCITRAL Model Law on International Commercial Arbitration (1985), with amendments as adopted in 2006 (https://uncitral.un.org/sites/uncitral.un.org/files/media-documents/uncitral/en/19-09955_e_ebook.pdf).

3
Answer to Question II (ii) (‘Is there a distinction in your arbitration law between domestic and international arbitration? If so, what are the main differences?’) Countries that have opted for a dualist model are, for instance, France and the Russian Federation; a unique model applies in the UK, Germany or The Netherlands (https://www.ibanet.org/LPD/Dispute_Resolution_Section/Arbitration/Arbcountryguides.aspx#arbitrationguides).

4
C. Seraglini, J. Ortscheidt, Droit de l’arbitrage interne et international (Montchrestien, 2013) at pp. 34-35 ; I. Fadlallah, D. Hascher, Les grandes décisions du droit de l’arbitrage commercial (Dalloz, 2019), at p.16.

5
Décret no. 2011-48 portant réforme de l’arbitrage, 14 Jan. 2011; C. Seraglini, J. Ortscheidt, op. cit. at p. 38.

6
FAA, Title 9, US Code, Sect. 1-14, 12 Feb. 1925 (43 Stat. 883), as amended.

7
In Nigeria, the Arbitration and Conciliation Act distinguishes between domestic and international arbitration. The major differences are: (i) Arbitration Rules contained in the Act are mandatory only for domestic arbitrations; (ii) the appointing authority is different for domestic arbitrations than for international arbitration; (iii) grounds for setting aside an award) – see supra note 3, IBA Guide for Nigeria.

8
NY Convention (Art. V(1) lit. c) : ‘1. Recognition and enforcement of the award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the competent authority where the recognition and enforcement is sought, proof that: … (c) The award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be recognized and enforced’.

9
Baker Marine NIG Ltd.v Chevron NIG Ltd., 191 F.3d 194 (2d Cir. 1999). NY Convention (Article V(1) lit. e) : ‘1. Recognition and enforcement of the award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the competent authority where the recognition and enforcement is sought, proof that: … (e) The award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.

10
Art. 1443, French CPP (‘In order to be valid, an arbitration agreement shall be in writing. It can result from an exchange of written communications or be contained in a document to which reference is made in the main agreement.’) [Translation available at http://parisarbitration.com/wp-content/uploads/2017/02/EN-French-Law-on-Arbitration.pdf.]

11
Civ. 1re, 9 Nov. 1993, No. 91-15.194, Bomar Oil vs. E.T.A.P.

12
Art. 1464(4), French CPP, which does not apply in international arbitration (cf. Art. 1506, French CPP).

13
Art. 1489, French CPP, which applies only in domestic cases (‘An arbitral award shall not be subject to appeal, unless otherwise agreed by the parties.’).

14
Art. 1491, French CPP (‘An action to set aside an award may be brought except where the parties have agreed that the award may be appealed …).

15
Hall Street Associates, L.L.C. v. Mattel, Inc., 552 US 576 (2008),

16
2019 ALI Restatement – US Law of International Commercial and Investor-State Arbitration.

17
Art. 1504, French CCP (‘An arbitration is international when international trade interests are at stake.’).

18
Civ. 1re, 4 July 1972, no. 70-14.163, Hecht vs. Sté Buisman’s; see also CA Paris, 13 June 1996, Sté KFTCIC vs. Sté Icori Estero; C. Seraglini, J. Ortscheidt, op. cit., at pp. 520 – 527; I. Fadlallah, D. Hascher, op. cit., at p. 61.

19
§ 202, US FAA.