Article by Hans Smit
As international arbitration grows by leaps and bounds, increased attention has been given to what has variously been called a-national, floating, and stateless arbitration and arbitral awards. The basic characteristic of a-national arbitration is that it does not owe its existence, validity, or effectiveness to a particular national law. A-national arbitration is therefore regarded as the epitome of international arbitration.
Domestic arbitration deals with purely domestic matters and is governed by domestic law. Foreign arbitration deals with matters that have elements connecting them to a single foreign state and is governed by the law of that foreign state. International arbitration deals with matters that have elements connecting them to more than one state; nevertheless, it is generally regarded as governed by the law of a particular state. Most frequently, the law of the state in which the arbitration is held, the lex loci arbitri, is argued to be the law most appropriately applied to international arbitrations and awards. Because application of the lex loci arbitri may, in particular cases, lead to undesirable results, the concept of a-national arbitration has been advanced as providing an appropriate escape from undue state-law limitations.
Classifying awards into domestic, foreign, and international categories may present difficulties in particular cases. For example, an arbitration between two American parties conducted by American arbitrators in the United States is likely to be regarded as domestic, even though it relates to a contract concluded abroad. But United States courts may regard an arbitration conducted by American arbitrators relating to a contract to be performed in the United States by foreign parties, at least for some purposes, as foreign. An arbitration in the United States with parties from different foreign states, a prime example of a truely international arbitration, may be regarded variously as domestic or foreign.
Indeed, as is invariably true, classifications should not be made in the abstract, but by reference to the purposes for which they are made. Thus, it may be appropriate to classify a particular arbitration as domestic or foreign, depending on the purpose for which it is made. Once this approach is kept firmly in mind, the concept of a-national arbitration becomes unnecessary.
A-national arbitration was developed to permit escape from unduly limiting provisions of the law of the nationality of the award, which was considered to be the law of the arbitral situs. But such provisions can more properly be avoided by applying, under appropriate choice of law rules, the law of a state other than the lex loci arbitri. In any event, even the most elaborate institutional rules cannot avoid drawing on some body of law for their effectiveness. Arbitration does not proceed in a legal vacuum. Ultimately, it must rely for its existence in the legal order upon some law rendering it valid and effective. As will be demonstrated, this law is national law.
The thesis of this Article is therefore an unusual one: A-national arbitration neither exists nor is needed.
About the Author
Hans Smit. Fuld Professor of Law and Director, Parker School of Foreign and Comparative Law, Columbia University; LL.B. 1946, LL.M. 1949, University of Amsterdam; A.M. 1953, LL.B. 1958, Columbia University.
Citation
63 Tul. L. Rev. 629 (1989)