Extracts from ICC arbitral awards dealing with questions of public policy and mandatory rules, plus an accompanying commentary discussing arbitrators’ approaches to the application of public policy/mandatory rules in connection with the future enforcement of the award.
The article presents the results of an analysis of ICC arbitral awards in which tribunals considered public policy/mandatory rules in the state(s) where the enforcement of a future award was likely to be sought. The authors put forward three propositions: (i) tribunals do not spontaneously look into public policy issues/mandatory rules likely to affect the enforceability of their awards and parties rarely raise the question; (ii) arbitrators have an obligation to use their best efforts to render an enforceable award but are not required to guarantee that their award will be enforceable in every jurisdiction; and (iii) arbitrators will take into account public policy/mandatory rules that reflect international standards.
The authors discuss the extent to which the cases studied confirm these propositions. They find that references to public policy/mandatory rules in relation to the enforceability of a future award are rare and attribute this to the nature of international arbitration, which leads to decisions whose enforcement may be sought in more than one jurisdiction, making it impractical and inadvisable, if not impossible, to take account of public policy/mandatory rules in all of them. Also, arbitrators are not beholden to any given state and have no role to play in defending its public policy. Nonetheless, as the cases show, arbitrators may take account of public policy considerations at the place of possible enforcement of an award when these correspond to international public policy, or when they wish to take the precaution of demonstrating that their decision is not in breach of potentially applicable public policy/mandatory rules.