THE JUDICIARY AND THE ARBITRAL PROCESS

Justice Saleem Marsoof, P.C.

The Wrath of Themis

Arbitration is perhaps the oldest form of dispute resolution, and it probably pre-dated litigation.1
It has been used by ancient civilizations from time immemorial to resolve disputes and to preserve the
peace. Evidence of its use as an institutionalised form of social control and dispute resolution can be
found as early as about 3,000 B.C. in Egypt, Babel and Assyria.2 It was popular in ancient Greece and
Rome, where an institutionalized system of combined mediation and arbitration appears to have been the
preferred means of resolving civil disputes.3

Derek Roebuck, in his book entitled Ancient Greek Arbitration, states that not only ordinary
farmers but also the noblest overlords and demigods and even the gods themselves were used to
submitting their disputes for arbitration by a third party. 4 Roebuck observes that the arbitral process was
self-sufficient, and did not need the assistance of the Courts. The ancient Greeks chose whomever they
wanted as an arbitrator. They did not bother with enforcement - the wrath of Themis was expected to take
care of those who ignored the terms of a settlement or award.

However, with the passing of time, Courts have taken control of the arbitral process to such an
extent that the President of the Court of Appeal of Botswana once observed that without the assistance
from the Courts, ordinary arbitrations would become impossible to conduct.5 In the fourth quarter of the
twentieth century the United Nations Commission on International Trade Law (UNCITRAL) formulated a
Model Law on International Commercial Arbitration6 and the UNCITRAL Arbitration Rules7, and
together they have played a vital role in harmonising the relationship between Courts and arbitral
tribunals.

Consensual Arbitration

The main feature of arbitration is that it is consensual in nature and private in character. The
concept of party autonomy associated with arbitration not only allows the parties to select their
arbitrators,8 the seat of arbitration9 and the rules of procedure to be followed by the arbitrators,10 but even

1
ICJ, The International Court of Justice, Chapter 1: History, http://www.icj-cij.org/icjwww /igeneralinformation
/ibbook/Bbookchapter1.HTM.
2
Christian Bhring-Uhle, Traditional Mediation v. Modern Mediation, Stockholm Arbitration Newsletter, 1-2001 1,
http://www.sccinstitute.com/_ upload/shared_files/newsletter/newsletter_1_2001.pdf.
3
See, generally Mustill, Arbitration: History and Background [1989] JIA 43; Derek Roebuck and Bruno de Loynes de
Fumichon, ROMAN ARBITRATION (2004).
4
Derek Roebuck, ANCIENT GREEK ARBITRATION, 23 (2001). It is interesting to note that in The Holy Quran Surah An-Nisaa
4:35 God commands: if you fear a dispute between husband and wife, then appoint an arbiter from the side of the family of man
and an arbiter from the side of the family of woman, if these two desire reconciliation, then Allah will cause unity between them.
Undoubtedly, Allah is knowing, Aware.
5
Hon. Justice Austin N.E.Amissah, Judicial Aspects of the Arbitral Process paper presented at the WIPO Biennial IFCAI
Conference held in Geneva, Switzerland, on 24th October, 1997.
6
UNCITRAL Model Law on International Commercial Arbitration, 1985 UN doc. A/40/17, Annex 1 (hereafter referred to as
the UNCITRAL Model Law).
7
UNCITRAL Arbitration Rules, 1976 Resolution 31/98 adopted by the UN General Assembly on 15th December, 1976
(hereafter referred to as the UNCITRAL Rules).
8
See, 7(1) of the Arbitration Act No. 11 of 1995. See, also Art. 10 and 11 of the UNCITRAL Model Law, supra note 6 and
Art. 5-8 of the UNCITRAL Rules, supra note 7.
9
Id, 16. See also Art. 20 of the UNCITRAL Model Law, supra note 6 and Art. 16 of the UNCITRAL Rules, supra note 7.

1
permits them to chose the rules of law to be applied in determining the substantive dispute before them.
The Arbitration Act No. 11 of 1995 (hereinafter the Arbitration Act) provides that an arbitral tribunal
shall decide the dispute in accordance with such rules of law as are chosen by the parties as applicable to
the substance of the dispute. 11 The use of the words rules of law in this subsection, as opposed to the
words the law as used in Section 24(2) of the Arbitration Act and Article 28(2) of the UNCITRAL
Rules, appear to be deliberate, and would only mean that the parties are free to choose not only national
laws such as the law of Sri Lanka or England but also rules of law such as the lex mercatoria or the law
and practice of Bankers. The proceedings before the arbitrators are private, and they are also regarded as
confidential.12

By choosing arbitration, the parties manifest an intention to exclude Courts from both the conduct
of the proceedings and the adjudication of the case. Theoretically, arbitration proceedings can be
commenced and concluded without any judicial involvement, though in practical terms the possibility of
intervention by the Courts cannot be ruled out. As has been observed by the United Nations Commisssion
on Trade and Development (UNCTAD):

A Court can block an arbitration altogether by enjoining a party from participating therein. It can also disturb
arbitration proceedings by interfering with the composition of the arbitral tribunal, by restraining foreign
attorneys from representing a party in arbitration proceedings, by hearing challenges against procedural orders
of the arbitrators, or by taking any other measure directed to control the course of the arbitral proceedings.
Finally, Courts can reverse the final award on appeal or deprive it of most of its legal force by setting it aside.
Arbitration only exists in the space allowed to it by Courts. Too much Court intervention simply suffocates
arbitration.13

It is important to stress that proceedings for the enforcement of an arbitral award differ in pith and
substance from arbitration proceedings. While arbitration proceedings are consensual in nature,
enforcement proceedings are clearly judicial in character. The Common Law of England recognised that
it is an implied term of an agreement to submit to arbitration disputes arising under a contract that any
award made on a submission will be honoured.14 A breach of that implied term arising out of the failure
to honour an award, gave rise to an independent cause of action to enforce the award which is essentially
contractual. This would have been the sole remedy for enforcement of arbitral awards in the absence of
statutory provisions. However, from the late nineteenth century, legislation was introduced in the United
Kingdom with a view of providing a special statutory regime for the recognition and enforcement of
arbitral awards, eliminating the need to file breach of contract suits for the enforcement of awards. Part
VII of the Arbitration Act of Sri Lanka as well as Part III of the UK Arbitration Act of 1996 seek to give
effect to the provisions of the UN Convention on the Recognition and Enforcement of Foreign Arbitral
Awards (New York Convention).15

The contrast between arbitration proceedings and proceedings for the recognition and
enforcement of arbitral awards came into focus in State Timber Corporation v. Moiz Goh (Pte) Ltd.,16 in
which the Supreme Court of Sri Lanka stressed that the judicial proceeding for enforcement is not a

10
Id., 17. See, the UNCITRAL Model Law, supra note 6, which provides that the parties shall be free to agree on the
procedure to be followed by the arbitral tribunal in conducting the proceedings. See also Art. 1(1) of the UNCITRAL Rules.
11
Id., 24(1), which follows Art. 28(1) of the UNCITRAL Model Law, supra note 6.
12
See, Art. 25(4) and Art. 32(5) of the UNCITRAL Rules, supra note 7. See also, Aita c. Ojjeh, Paris, 18 February 1986, (French
Court of Appeal); Ali Shipping Corp v. Shipyard Togir [1999] 1 WLR 314. Compare, ESSO/BHO v. Plowman [1995] 128
Australian L.R. 391; Bulgarian Foreign Trade Bank Ltd. v. A.I. Trade Finance Inc., Case No. T 1881-99,(Swedish Supreme
Court).
13
UNCTAD, Dispute Settlement: International Commercial Arbitration, 5.8 Court Measures, 3 (2005).
14
Agromet Motoimport Ltd., v. Maulden Engineering Co (Beds) Ltd., [1985] 2 All ER 436 per Otten, J.
15
The United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 10 th June 1958).
16
[2000] 2 Sri L.R. 316 (CA); [2002] BALR 44 (SC).

2
continuation of the arbitration proceeding.17 The case involved the enforcement of an arbitral award
arising from arbitration proceedings, which had commenced prior to the coming into operation of the
Arbitration Act. The award was made after the Arbitration Act came into operation, but the Singaporean
company chose to file papers for enforcement of the award in the District Court of Colombo in terms of
Sections 693 to 698 of the Civil Procedure Code,18 despite the fact that the said provisions were repealed
by the Arbitration Act,19 which provided for enforcement of awards in the High Court.20 The Court of
Appeal confirmed the decision of the District Court that this was indeed the correct procedure, on the
basis that proceedings commenced prior to the repeal of a statute have to be concluded under the repealed
statute, but the Supreme Court held that the arbitration proceedings came to an end with the award, and
the proceedings for enforcement were distinct proceedings of altogether a different character, which could
only attract the provisions of the Arbitration Act. As Chief Justice Sarath Silva observed in the course of
his judgment, the phrase arbitration proceedings is not synonymous with proceedings before a Court
of Justice for the enforcement of an arbitral award.21

Judicial Perceptions of the Arbitral Process

From a judicial standpoint, there could be two alternative perceptions of the arbitral process. The
first approach, favoured by the English Common Law, is to treat arbitration as a branch of private law,
specifically the law of contract. Accordingly, even in the absence of a special statutory mechanism, an
arbitral award may be enforced by an action on the contract. On this analysis, the State merely lends its
own coercive powers to reinforce the arbitral process wherever it needs judicial assistance and support.
Nevertheless, the formulation of the rights, duties and powers of the arbitrator and the mutual obligations
of the parties in relation to the conduct of the reference, are created and regulated by the arbitration clause
or the submission agreement, and are no concern of the State.22

The second approach is to regard arbitration as an aspect of public law. The arbitrator exercises
judicial power which is essentially vested in the State. As Lord Saville once explained, since the State is
in overall charge of justice, and since justice is an integral part of any civilized democratic society, the
Courts should not hesitate to intervene as and when necessary, so as to ensure that justice is done in
private as well as public tribunals.23 Accordingly, the State has the right and duty to ensure, through the
medium of the Courts, that the reference is conducted in accordance with procedural norms which the
State itself lays down.

The fact that the UNCITRAL Model Law and the UNCITRAL Rules are consistent with both
these approaches, speaks volumes for their flexibility and resilience. While it is now universally accepted
that the judiciary has a great role to play in facilitating and strengthening the arbitral process, the manner
in which Courts deal with issues relating to international commercial arbitration would considerably
differ from country to country and from time to time. Lord Mustill once compared the relationship
between Courts and arbitrators to a relay race, and observed that:

In the initial stages, before the arbitrators are seized of the dispute, the baton is in the grasp of the Court; for at
that stage there is no other organisation which could take steps to prevent the arbitration agreement from being
ineffectual. When the arbitrators take charge they take over the baton and retain it until they have made an

17
[2002] BALR 44, 49.
18
Legislative Enactments of Ceylon, Cap. 101. (1956 Revision)
19
See, 47(2) of the Arbitration Act, supra note 8.
20
Id., 31 read with 33.
21
State Timber Corporation v. Moiz Goh (Pvt) Ltd., [2002] BALR 44, 49.
22
Mustill and Boyd, THE LAW AND PRACTICE OF COMMERCIAL ARBITRATION IN ENGLAND, 4 (2nd Ed. 1989).
23
Lord Saville, Denning Lecture, ARBITRATION AND THE COURTS,157 (1995).

3
 award. At this point, having no longer a function to fulfil, the arbitrators hand back the baton so that the Court
can, in case of need, lend its coercive powers to the enforcement of the award. 24

It would be simple if the respective domains of arbitral tribunals and national Courts could be so
clearly distinguished. However, as the same distinguished commentator goes on to state-

In real life the position is not so clear-cut. Very few commentators would now assert that the legitimate
functions of the Court entirely cease when the arbitrators receive the file, and conversely very few would doubt
that there is a point at which the Court takes on a purely subordinate role. But when does this happen? And
what is the position at the further end of the process? Does the Court retake the baton only if and when invited
to enforce the award, or does it have functions to be exercised at an earlier stage, if something has gone wrong
with the arbitration, by setting aside the award or intervening in some other way? 25

The relationship between the arbitral tribunal and Courts may be construed as one of
partnership, in which each has a different role to play at different times, but what is important is for
both institutions to co-operate for the better achievement of the ends of justice.

UNCITRAL and International Commercial Arbitration

The United Nations Commission on International Trade Law (UNCITRAL) which was
established by the United Nations in 1966,26 with a mandate to unify and harmonise international trade
law, has played a major role in strengthening the infrastructure for the effective resolution of international
commercial disputes through arbitration. In 1976, after extensive consultation with arbitral institutions
and centres of international commercial arbitration, it adopted the UNCITRAL Rules27 with a view of
harmonizing rules of ad hoc arbitration for international commercial disputes.

These Rules are now adopted in a vast majority of international commercial arbitrations and even
a fair proportion of investor-state arbitrations.28 With the objective of encouraging States to introduce
uniform laws relating to arbitration, UNCITRAL also introduced in 1986 the UNCITRAL Model Law on
International Commercial Arbitration,29 which has been adopted by many nations. The Sri Lankan
Arbitration Act has adopted many, but not all, of the provisions of the Model Law.

Although the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New
York Convention)30 was adopted by the United Nations eight years prior to the establishment of
UNCITRAL, the promotion of the Convention has also become an integral part of the Commission's
programme of work. The New York Convention, which has been described as the single most important
pillar on which the edifice of international arbitration rests,31 requires Courts of contracting States to
give effect to an agreement to arbitrate when seized of an action in a matter covered by an arbitration
agreement and also to recognize and enforce awards made in other States, subject to specific limited

24
COMMENTS AND CONCLUSIONS in Conservatory & Provisional Measures in International Arbitration, 9th Joint Colloquium,
(ICC Publication 1993) 118.
25
Id.
26
By UN General Assembly Resolution No. 2205 (XXI) of 17 December 1966.
27
Supra note 7.
28
In the absence of any procedure to register arbitration proceedings following the UNCITRAL Rules, supra note 7, it is not
possible to estimate the number of such arbitrations. However, according to UNCTAD statistics, as of November 2005, 219
treaty-based claims were known, with three-quarters of these filed since 2002. Of these, 65 had been arbitrated under the
UNCITRAL Rules. See, Investor-State Disputes Arising From Investment Treaties: A Review, February 2006,
UNCTAD/ITE/IIT/2005/4, at 5, available at http://www.unctad. org/en/docs/iteiit 20054_en.pdf.
29
Supra note 6.
30
The United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, supra note 15.
31
Wetter, The Present Status of the International Court of Arbitration of the ICC: An Appraisal (1990) 1 AMERICAN REVIEW OF
INTERNATIONAL ARBITRATION 91 at 93.

4
exceptions. At the time of writing, 142 nation States are parties to this Convention.32

While UNCITRAL has played a significant part in popularising international commercial

arbitration, several other factors have also contributed to its popularity. Although as noted already,
arbitration had been in existence from ancient times, it earned its modern impetus thanks to the great
technological advances of the twentieth century including the internet. In fact, the internet has surpassed
the radio, the telex, the telephone, the television and the telefax in propelling the phenomenon of
globalisation and facilitating easy movement of goods, services and funds. This in turn has generated an
unprecedented surge in international commercial activity, which needless to say, has also given rise to a
large volume of disputes which by their very nature demand speedy resolution.

The hallmark of international commercial arbitration has been its ability to overcome laws delays
through procedures that the parties themselves can lay down, while reducing the cost of international
litigation. Serious conflicts of law issues that necessarily arise from the interaction of people and
companies belonging to various legal systems in the arena of commerce,33 and complex jurisdictional
problems that emanate from cyberspace in which commercial transactions are increasingly contracted,34
have compelled the business community to look to international commercial arbitration as the only viable
means of dispute resolution.

Professor Yasuhei Tanuguchi has outlined the factors that favour arbitration over litigation in the
arena of international trade, in the following words:

Arbitration is preferred to other methods of dispute resolution for a variety of reasons. For the dispute arising
from international trade in particular, the advantage of arbitration is undisputed. Alternative will be litigation in
a national Court or private negotiation. Either party does not like to litigate in the national Court of the opponent
party. One must face an unfamiliar procedure conducted in a foreign language with possible bias in favor of the
local party. Moreover, one must anticipate complicated issues of jurisdiction. When a favorable judgment is
obtained, there can be a problem of recognition of foreign judgment unless it is enforced in the jurisdiction of
the judgment.

Each jurisdiction has different procedural rules. Today it is marked by a trend of legal unification. But the
judicial procedure is the last kind of thing which can be unified because it is not just a legal rule but a practice
conducted by the legal professionals trained and nurtured within the tradition of the jurisdiction. The judicial
procedure of other countries is not only unfamiliar but can also be onerous and markedly disadvantageous for a
foreign party. To be sued in the United States means a jury trial and submission to extensive discovery. For a
party and lawyer in the Western world, by the same token, an Asian Judiciary may look onerous. Generally
speaking, Asian judiciaries were established on the Western model and have a shorter history than the latter.
Westerners may have doubts about the competency, fairness and independence of an Asian Judiciary. We
Japanese think that Japan has the oldest and most modern Judiciary in Asia. But even ours is not free from
suspicion, justifiably or not. 35

An important reason for the popularity of commercial arbitration is the positive attitude adopted
by the Courts in modern times towards the arbitral process, and the judicial recognition of the concept of

32
See,http://www.uncitral.org/uncitral/en/uncitral_texts/arbitration/NYConvention_status.html, accessed on July 11, 2008.
33
See, Michael Pryles, Choice of Law Issues in International Arbitration reproduced in CURRENT LEGAL ISSUES IN
INTERNATIONAL COMMERCIAL LITIGATION 105 (Ed. Teo Keang Sood, 1997); Lakshman Marasinghe, PRINCIPLES OF
INTERNATIONAL TRADE LAW (1998) Chaps. 1 and 2; Dalhuisen, INTERNATIONAL COMMERCIAL, FINANCIAL AND TRADE LAW
(2004) Chapter 2; Charles Wild, CONFLICT OF LAWS (2005).
34
Ankit Majmudar, A Global Medium in a Territorial World Jurisdiction and the Internet, in Nandan Kamath, COMPUTERS,
INTERNET AND E-COMMERCE A GUIDE TO CYBERLAWS AND THE INFORMATION TECHNOLOGY ACT, 2000, WITH RULES AND
nd
NOTIFICATIONS 20 (2 Ed. 2000).
35
Yasuhei Tanuguchi, The Changing Attitude to International Commercial Dispute Settlement in Asia and the Far East, (1997)
ARBITRATION AND DISPUTE RESOLUTION LAW JOURNAL 67 at 72-73.

5
party autonomy. Gone are the days when an agreement to arbitrate was treated as an attempt to oust the
jurisdiction of the Court.36 Over the years, the Courts have developed a deep respect towards arbitration
despite its consensual nature and private character, and have not only readily given effect to agreements
to arbitrate but have also exercised caution in interfering in the arbitral process. This change of attitude is
reflected in Article II(3) of the New York Convention which reads as follows:

The Court of a Contracting State, when seized of an action in a matter in respect of which the parties have made
an agreement within the meaning of this article, shall, at the request of one of the parties refer the parties to
arbitration, unless it finds that the said agreement is null and void, inoperative or incapable of being performed.

This provision is mirrored in Article 8(1) of the UNCITRAL Model Law on International
Commercial Arbitration which provides that:

A Court before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a
party so requests not later than when submitting his first statement on the substance of the dispute, refer the
parties to arbitration unless it finds that the agreement is null and void, inoperative or incapable of being
performed.

It must be remembered that the UNCITRAL Model law does not have the force of law and
merely seeks to provide guidance to lawmakers. The above quoted Model Law provision has therefore
been adapted by the various legislatures that have adopted the Model Law, to produce somewhat diverse
legal provisions, which in essence require that the Court shall in the given circumstance refer the parties
to arbitration.37

The Malaysian Act provides further that arbitral proceedings may be commenced or continued,
and an award may be made, while the issue is pending before the Court. Article 1(1) of the UNCITRAL
Rules provides that:

Where the parties to a contract have agreed in writing that disputes in relation to that contract shall be referred
to arbitration under the UNCITRAL Arbitration Rules, then such disputes shall be settled in accordance with
these Rules subject to such modification as the parties may agree in writing.

Intervention of Courts in Arbitration Proceedings

The non-interventionist approach of the Courts towards the arbitral process is reflected in Article
5 of the UNCITRAL Model Law,38 which declares that-

In matters governed by this Law, no Court shall intervene except where so provided in this Law.

Although at first sight, this is a striking declaration of independence, it must be emphasised that the
Model Law does not seek to exclude the participation of what it calls the competent Court in carrying
out certain functions of arbitration assistance and supervision. In fact, it is noteworthy that at least 10 out
of the 36 articles of the Model Law recognise a possible role for the national Court.39

36
Thompson v. Charnock [1799] 8 Term Rep. 139. Cf, Scott v. Avery [1856] 5 HL Cas. 811.
37
See for example, 10(1) of the Malaysian Arbitration Act, 2005 (Laws of Malaysia Act 646). 5 of the Arbitration Act of Sri
Lanka merely provides that the Court shall have no Jurisdiction to hear and determine the matter.
38
Art. 5 of UNCITRAL Model Law, supra note 6.
39
See, for example, Art. 11 of UNCITRAL Model Law, supra note 6 (appointment of arbitrator), Art. 13 (challenge of
arbitrator), Art. 16 (appeal against the decision of the arbitral tribunal on the issue of jurisdiction), Art. 27 (Court assistance in
taking of evidence) and Articles 34 to 36 (ensure challenge to the arbitral award, or to its recognition and enforcement). See
further, Schlosser, The Competence of Arbitrators and of Courts (1992), ARBITRATION INTERNATIONAL No. 2 at 189 and Kerr
Arbitration and the Courts: the UNCITRAL Model Law, 34 (1985) I.C.L.Q. 1.

6
 The UNCITRAL Rules,40 on the other hand, do not contain any explicit declaration of policy
relating to judicial intervention, but it is possible to infer from their tenor that they generally do not
envisage or encourage Court intervention. Nevertheless, there are, at least two clear provisions of the
UNCITRAL Rules which appear to permit national Courts to intervene in arbitration proceedings. The
first of these is Article 1(2) of the UNCITRAL Rules which provides that where any of these Rules is in
conflict with a provision of the law applicable to the arbitration from which the parties cannot derogate,
that provision shall prevail. This provision seeks to recognise the mandatory rules of the lex arbitri. The
second, is Article 26(3) which provides that:

A request for interim measures addressed by any party to a judicial authority shall not be deemed incompatible
with the agreement to arbitrate, or as a waiver of that agreement.

These provisions recognise the need to reconcile policy and pragmatic considerations with the concept of
party autonomy which is so fundamental to international commercial arbitration, and emphasise that
striking the proper balance in a myriad of competing considerations is the key to the development of a
positive judicial attitude towards the arbitral process.

It is possible to identify at least four situations in which the intervention of the Court may be
necessary in support of the arbitral process. Court intervention may be necessary (1) for constituting the
arbitral tribunal, (2) for implementing the agreement to arbitrate, (3) for the grant of interim measures and
(4) for the recognition or enforcement of the arbitral award. Though by no means exhaustive, it is
believed that an in-depth study of the issues arising in these situations in the light of the provisions of the
UNCITRAL Model Law and the UNCITRAL Rules will provide insights that will help to understand the
role the judiciary can play in facilitating and supporting the arbitral process in the resolution of
international commercial disputes.

Constituting the Arbitral Tribunal

The composition of the arbitral tribunal is critical for a good arbitration. The ability the parties
have to choose their arbitrator, taking into consideration inter alia their special expertise in the relevant
field, is indeed a great advantage international commercial arbitration has over litigation. Here, the
distinction between institutional arbitration and ad hoc arbitration becomes significant. Institutional rules
such as those of the ICC, the AAA, and the LCIA, generally provide that where the mechanism agreed by
the parties for the appointment of arbitrators does not produce results, the appointing authority of the
institution to which those rules belong will act as the default authority and make the required
appointment. Thus, while in institutional arbitration, Courts are normally expected to stay away from the
appointment process, in ad hoc arbitration Court measures may sometimes be needed to constitute the
arbitral tribunal.

In arbitration agreements which do not attract institutional rules, the parties may have provided
for a mechanism to appoint the arbitrators. Where the parties have agreed upon a mechanism to constitute
the arbitral tribunal, they may possibly engage a third party or a Court of law to make the appointment.
Most countries have legislative provisions which enjoin the Court to facilitate the process of constituting
the arbitral tribunal. For instance, in the United States it is provided that:

A Court having jurisdiction under this chapter may direct that arbitration be held in accordance with the
agreement at any place therein provided for, whether that place is within or without the United States. Such
Court may also appoint arbitrators in accordance with the provisions of the agreement. 41

40
UNCITRAL Arbitration Rules, supra note 7.
41
United States Code Title 9, 206.

7
 It has been pointed out that while a statutory provision such as the above empowers Courts to
cooperate in the appointment of arbitrators, in the absence of such a provision Courts may refuse to
appoint the arbitrators in the manner agreed by the parties, thus rendering the arbitration agreement
pathological and unenforceable.42 Such a finding would not violate Article II(3) of the New York
Convention,43 as it does not empower Courts to appoint arbitrators although it imposes on State parties to
the Convention the duty to refer to arbitration the parties to an agreement to arbitrate. Therefore, if Courts
do not have this power under domestic law, they may find the agreement to be inoperative or incapable
of being performed.

It is clear from Articles 10 and 11 of the UNCITRAL Model Law that the said Model Law seeks
to confer on the parties, full autonomy with respect to the constitution of the arbitral tribunal. The default
mechanism of the Model Law is found in Article 11(4). This article provides that-

Where, under an appointment procedure agreed upon by the parties,

(a) a party fails to act as required under such procedure, or

(b) the parties, or two arbitrators, are unable to reach an agreement expected of them under such procedure,
or

(c) a third party, including an institution, fails to perform any function entrusted to it under such
procedure,

any party may request the Court or other authority specified in Article 6 to take the necessary measure, unless
the agreement on the appointment procedure provides other means for securing the appointment.

An UNCTAD document has highlighted the danger of omitting in local legislation provision
which empowers a particular Court to function as the default appointing authority as contemplated by the
Model Law.44 Of course, Section 7(3) of the Arbitration Act of Sri Lanka follows the language of Article
11(4) of the Model Law very closely and empowers the High Court to appoint the arbitrator or arbitrators
where the relevant party or parties fails to make the appointment.

Section 11(6) of the Indian Arbitration and Conciliation Act, 1996 is of some interest, as it
provides for the default appointment to be made by the Chief Justice of India or by any person or
institution designated by him.45 In Konkan Railway Corp. Ltd. v. Rani Construction Pvt. Ltd.,46 it was
held by the Supreme Court of India that the default power of the Chief Justice or any person or
institution designated by him under this provision is not adjudicatory, and that therefore he cannot be
made the subject of a petition for Special Leave to Appeal under Article 136 of the Constitution of India.
However, this decision has since been overruled by a seven-judge Bench of the Indian Supreme Court in
SBP & Co. v. Patel Engineering Ltd.47 In this case, by majority of six to one the Supreme Court held that
for the purpose of discharging the default function, the Chief Justice or the designated judge when called
upon to make the appointment, will have to determine issues regarding the existence of a valid arbitration
agreement, the existence or otherwise of a live claim, the existence of the condition for the exercise of his
power and on the qualifications of the arbitrator or arbitrators. The Court went on to hold that since an

42
UNCTAD, DISPUTE SETTLEMENT: INTERNATIONAL COMMERCIAL ARBITRATION, 5.8 Court Measures, 21 (2005).
43
UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards, supra note 15.
44
UNCTAD, DISPUTE SETTLEMENT: INTERNATIONAL COMMERCIAL ARBITRATION, 5.8 Court Measures, 24 (2005).
45
11(6) of the Indian Arbitration and Conciliation Act, 1996. For a comment on these provisions, see O.P.Malhotra, Default
Power of the Chief Justice to Appoint Arbitrators (2006) 72 J.C.I.A. 201.
46
[2002] 2 SCC 388 at 450, per Bharucha, C.J. affirming the three-judge bench decision in Konkan Railway Corp. Ltd. v. Mehul
Construction Co. [2000] 7 SCC 201.
47
[2005] 8 SCC 618.

8
order passed by the Chief Justice or by the designated judge of that Court, is a judicial order, an appeal
will lie against that order under Article 36 of the Constitution of India to the Supreme Court.

The UNCITRAL Arbitration Rules seek to minimise difficulties of this nature by interposing the
Permanent Court of Arbitration in the Hague (as opposed to any national Court) as the forum to which
resort could be had to deal with certain contingencies, including the appointment of arbitrators where the
parties fail to agree on the sole arbitrator or the party-appointed arbitrators fail to agree on the third
arbitrator.48 The Malaysian Arbitration Act, 2005 has sought to further circumvent difficulties by
providing for the appointment to be made by the Director of the Kuala Lumpur Regional Centre for
Arbitration if the parties fail to agree upon the sole arbitrator or where the two party-appointed arbitrators
fail to agree upon the third arbitrator. The Act also provides that if the said Director fails to make the
appointment, then the appointment should be made by the High Court at the instance of any party.49 This
innovative piece of legislation has thus vested the responsibility for the functioning of the default
mechanism squarely on the Kuala Lumpur Arbitration Centre, which is both prudent and beneficial.

Although the law does not lay down any minimum qualifications for arbitrators, any contract or
submission agreement providing for the appointment of arbitrators, may stipulate certain qualifications.
These qualifications may take a positive or a negative form. For example, it might be stipulated that the
arbitrator should be a person engaged in a particular trade50 or should be a merchant or a commercial
man.51 Similarly, the stipulated qualification may also take a negative form such as, for example, the
arbitrator shall not be a lawyer.52 It is noteworthy that it is provided expressly in the UNCITRAL
Model Law that unless otherwise agreed by the parties, no person shall be precluded by reason of his
nationality from acting as an arbitrator.53 However, the usual practice is to appoint a sole arbitrator, or
the chairman of the arbitral tribunal from a different nationality from that of the parties to the dispute.54

The appointment of an arbitrator will be void if the arbitrator does not possess the qualification
stipulated in the contract. Since this affects the jurisdiction of the arbitral tribunal, even proceedings
conducted before such an arbitrator will be a nullity.55 In Sri Lanka the appointment of an arbitrator who
does not possess the requisite qualification may be challenged before the tribunal or, alternatively in the
High Court.56

It is a cardinal principle that the arbitral tribunal should be independent and impartial. In Mustang
Enterprises Inc v. Plug-in Storage Systems Inc.57 it was held in the United States that arbitrators from law
firms which are affiliated to or have an alliance with a firm representing one of the parties may not be
considered independent. It seems that the same will apply to arbitrators who have a close relationship to
the lawyers of any side. However, in Laker Airways Inc v. FLS Aerospace Ltd 58 the English Court held
that the fact that an arbitrator (barrister) was from the same chambers as counsel for one of the parties did
not give rise to justifiable doubts as to his impartiality or independence. This decision was specific to its
facts and it is not the final word on this issue.

48
Art. 6 (2) and 7 (2) (b) of UNCITRAL Arbitration Rules, supra note 7.
49
See, 13(4) and 13(5) of the Malaysian Arbitration Act, 2005, supra note 37.
50
See, Oakland Metal Company Ltd. v. Bernaim & Company Ltd.[1953] 2 Lloyds Rep 192; The Myron v. Tradax Export [1969]
1 Lloyds Rep. 411.
51
See, Rahcassi Shipping Co. SA v. Bluestar Line Ltd. [1967] 2 Lloyds Rep. 761; Pando Comania Naviara SA v. Filmo SAS
[1975] 1 Lloyds Rep. 560.
52
See, Rahcassi Shipping Co.SA v. Bluestar Line Ltd. [1967] 2 Lloyds Rep. 761.
53
See, UNCITRAL Model Law, supra note 6.
54
See also, Art. 6.1 of the LCIA Rules.
55
See, Rahcassi Shipping Co. SA v. Bluestar Line Ltd, supra note 51.
56
See, 11(1) of the Arbitration Act of Sri Lanka, supra note 8.
57
F.Supp. 881 (ND Ill. 1995) 874.
58
[2000] 1 WLR 113

9
 Under the UNCITRAL Model Law, the requirement of independence and impartiality is a
mandatory provision from which the parties may not derogate.59 In regard to the procedure for
challenging an arbitrator on the ground that he was not independent or impartial, there is a distinction
between institutional arbitration and ad hoc arbitration. The independence and impartiality of arbitrators
is emphasized by the provisions of all institutional arbitrational rules which also provide some
institutional mechanism for challenge in case of a deviation from the required standards. This generally
obviates the need to resort to Court for challenging an arbitrator. However, were the arbitration is ad hoc,
a challenge might have to be made in the Court of the lex loci arbitri. In the event the ad hoc arbitration is
governed by the UNCITRAL Arbitration Rules, where circumstances exist that give rise to justifiable
doubts as to the arbitrators impartiality or independence, the challenge taken by a party should be
decided by the appointing authority.60 The Sri Lankan Arbitration Act, places the responsibility of
deciding on a challenge on the arbitral tribunal in the first instance, subject to a further challenge a
disgruntled party can make before the High Court.61 It is significant to note that with a view of avoiding
delays, the Act provides that while a challenge is pending before the High Court, the arbitral tribunal
including the arbitrator who has been challenged may continue with the case and even proceed to make an
award.62

While a Court of law that deals with a challenge to an arbitrators independence or impartiality or
with an appeal from the decision of an appointing authority or an arbitral tribunal would generally give
weight to the autonomy of the arbitral process, it would also be mindful of the need to maintain the
credibility of the arbitral system. Corruption and favouritism can undermine the confidence placed by the
business community on the arbitral process and adversely affect the popularity of this important system of
dispute resolution.63

Implementing the Arbitration Agreement

The judiciary is often called upon to play a supportive role in implementing the agreement to
arbitrate. The New York Convention and the UNCITRAL Model Law expressly provide that where the
parties invoke the jurisdiction of Court despite an agreement to arbitrate the dispute, the Court should stay
proceedings and refer the parties to arbitration, unless it finds that the agreement is null and void,
inoperative or incapable of being performed.64 The Malaysian Arbitration Act, 2005, which has been
formulated in the same lines, provides that-

A Court before which an action is brought in respect of a matter which is the subject of an arbitration agreement
shall, where a party makes an application before taking any other steps in the proceedings, stay those
proceedings and refer the parties to arbitration unless it finds:

(a) that the agreement is null and void, inoperative or incapable of being performed; or

59
See, Art. 12(2) of the UNCITRAL Model Law: See also, Holtzmann and Neuhaus, A GUIDE TO THE UNCITRAL MODEL LAW
ON INTERNATIONAL COMMERCIAL ARBITRATION, 409 (1989).
60
UNCITRAL Arbitration Rules, supra note 7, Art. 10 read with Art. 12.
61
10(3) of the Sri Lankan Arbitration Act, 1995, supra note 8.
62
Id. 10(4).
63
In MBNA American Bank v. Hart 2006 ND 33, 710 N.W.2d 125 the Supreme Court of the State of North Dakota has pointed
out that while an arbitral award may be set aside if it has been procured by corruption, fraud or undue means, a party who was
aware of the relevant facts but failed to challenge the proceedings in a timely manner prior to the award being made will not be
entitled to relief. The Court observed that a party seeking to set aside an award must demonstrate, inter alia that due diligence
would not have prompted the discovery of the fraud during or prior to the arbitration.
64
See, Art. II(3) of the UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards, supra note 15, Art. 8(1)
of the UNCITRAL Model Law on International Commercial Arbitration, supra note 6.

10
 (b) that there is in fact no dispute between the parties with regard to the matters to be referred .65

The corresponding Sri Lankan provision, on the other hand, does not expressly provide for a stay
of proceedings. The provision reads as follows:-

Where a party to an arbitration agreement institutes legal proceedings in a Court against another party to such
agreement in respect of a matter agreed to be submitted for arbitration under such agreement, the Court shall
have no jurisdiction to hear and determine such matter if the other party objects to the Court exercising
jurisdiction in respect of such matter. 66

The above provision has resulted in actions filed in contravention thereof being dismissed. This
may cause problems to a party if the arbitral tribunal later decides that it does not have jurisdiction with
respect to the matter, particularly if the cause of action in the meantime gets prescribed or time-barred.
Such difficulties are circumvented by a mere stay of proceedings, as the party can revert to the Court case
if the arbitral tribunal refuses to assume jurisdiction. It must be remembered that when the Court
renounces jurisdiction over a dispute and stays proceedings in favour of arbitration, it does so only for the
purpose of giving effect to the arbitration agreement, and would retain jurisdiction for the purpose of
making orders in aid of the process of arbitration.67

The Court also has the discretionary power to grant an anti-suit injunction to restrain foreign
Court proceedings which are in breach of a prior agreement to arbitrate.68 Although in The Golden Anne
Court was mindful of not committing an unacceptable infringement of the prerogatives of the foreign
Court,69 in The Angelic Grace70 Millen LJ commented that:

In my judgement, where an injunction is sought to restrain a party from proceeding in a foreign Court in breach
of an arbitration agreement governed by English law, the English Court need feel no difference in granting the
injunction, provided that it is sought promptly and before the foreign proceedings are too far advanced.

In fact, arbitral tribunals too have sometimes by way of interim measure ordered that a party to an
arbitration agreement should refrain from taking any further steps in parallel Court proceedings.71

It is clear from Article II (3) of the New York Convention, Article 8(1) of the UNCITRAL Model
Law and statutory provisions such as 10(1)(a) of the Malaysian Arbitration Act, 200572 that the Court
has the power to decide whether it should exercise jurisdiction over a particular dispute on the basis that
the arbitration agreement is either void, inoperative or incapable of being performed. In deciding whether
the agreement to arbitrate is void, inoperative or incapable of being performed, the Court will be guided,
firstly, by Article II(1) of the New York Convention which provides that:

Each Contracting State shall recognize an agreement in writing under which the parties undertake to submit to
arbitration all or any differences which have arisen or which may arise between them in respect of a defined
legal relationship, whether contractual or not, concerning a subject matter capable of settlement by arbitration.

65
10(1) of the Malaysian Arbitration Act. 2005, supra note 37.
66
5 of the Sri Lankan Arbitration Act, supra note 8.
67
Mustill and Boyd, supra note 22, 157.
68
See, Pena Copper Mines Ltd v. Rio Tinto Co Ltd [1911] 105 LT 846; Aggeliki Charis Compania Maritima SA v. Pagnan SpA;
The Angelic Grace [1995] 1 Lloyds Rep. 87.
69
World Pride Shipping Ltd v. Daiichi Chuo KK, The Golden Anne [1984] 2 Lloyds Rep. 489.
70
Supra note 68.
71
See, E-Systems v. Iran Case No. 338 2 Iran-US CI. Trib. Rep. 51 [1983] Interim Award dated 4th February, 1983; SGS Socit
Gnrale de Surveillance SA v. Pakistan ICSID Case No. ARB/01/13. See also, Michael Black and Rupert Reece, Anti-Suit
Injunctions and Arbitration Proceedings, (2006) 72 JCIA 207.
72
Supra notes 6 and 37.

11
 In Elgitread Lanka (Pvt.) Ltd v Bino Tyres (Pvt.) Ltd 73 the arbitration clause contained in a
Franchise Agreement provided that any dispute arising out of this Agreement shall be referred to the Sri
Lanka Chamber of Commerce and Industry, Colombo, for arbitration, whose decision shall be binding
and final. One of the parties to the Franchise Agreement (Bino Tyres), filed action in the Commercial
High Court of Colombo claiming damages for the alleged breach of the Agreement, and the other party
(Elgitread) took objection on the basis that Section 5 of the Arbitration Act ousted the jurisdiction of court
since there was an agreement to arbitrate. The party that instituted action responded that the arbitration
clause was void or incapable of being performed as no entity existed with the name Sri Lanka Chamber
of Commerce and Industry, Colombo, and the Commercial High Court upheld the submission and
proceeded to exercise jurisdiction. In overturning this decision, the Supreme Court referred to the
obligation of Sri Lanka contained in Article II(1) of the New York Convention to recognize any
agreement entered into in writing to submit a dispute to arbitration, and emphasized that provisions
existed in Section 7 of the Arbitration Act for the appointment of the arbitrators even where there was
no valid agreement between the parties for the appointment of arbitrators.

Conversely, courts will also have to be mindful of the negative requirement in Article V(1)(a) of
the New York Convention that the parties to the agreement referred to in article II should not have been
under some incapacity under the law applicable to them. This means that to be valid and operative, the
arbitration agreement must (1) be in writing (2) relating to an existing or future dispute (3) arising in
respect of a defined legal relationship whether contractual or not, and (4) concerning a subject matter
which is capable of settlement by arbitration.74 To this, may be superadded as (5) the capacity of the
parties to the arbitration agreement.

While it is not proposed to go into details about any of these matters, it is appropriate to mention
that although the UNCITRAL Arbitration Rules requires not only the arbitration agreement and the award
but also notices, pleadings, submissions etc. to be made in writing, there is no definition of this term in
the Rules, and the question may soon arise as to whether electronic means such as email can be included
within this requirement. Electronic mail is, for better or for worse, integral to modern life. What if
arbitration proceedings (other than on-line proceedings75) were commenced by, or proceeded with by,
email but one of the parties claims that it never received any such email? This was a key issue in a recent
case76 which highlights the difficulties that could arise in such an eventuality.

In deciding these matters the Court would apply the law applicable to the arbitration (lex arbitri)
which would more often than not be the law of the place of the arbitration (lex loci arbitri).77 For instance,
in India and Sri Lanka, it has been held that the existence of an agreement to arbitrate would not deprive
the Court from exercising its equitable and extra-ordinary jurisdiction under the relevant company
legislation to deal with complaints of oppression and mismanagement as such disputes are not arbitrable
and arbitral tribunals do not possess the statutory powers to grant relief in these circumstances.78

73
SC (Appeal) No.106/08 decided on 27.10.2010. See also, Nuwan Peiris, UNCITRAL Arbitration Culture in Sri Lanka after
Bino Tyres, [2012] Int.A.L.R., Issue 5, N 37.
74
For a detailed discussion of these requirements, see Redfern and Hunter LAW AND PRACTICE OF INTERNATIONAL COMMERCIAL
ARBITRATION (2004) Chap. 3.
75
Which may soon be possible under some institutional rules such as the proposed WIPO Arbitration Rules. There is also an
emerging International On-line Arbitration Court (IOAC). See, http://www.sefirot-gmbh. de/en/projekte/iosg/intro.htm
76
Bernuth Lines Ltd. v. High Seas Shipping Ltd. [2005] EWHC 3020 (Comm)
77
Art. 16 (1) of the UNCITRAL Rules, supra note 7 provide that Unless the parties have agreed upon the place where the
arbitration is to be held, such place shall be determined by the arbitral tribunal, having regard to the circumstances of the
arbitration.
78
See, Gajarabai Patny v. Patny Transport (Pvt) Ltd [1966] Company Cases 745 (Andhra Pradesh). For Sri Lanka, see also,
Aitken Spence & Co Ltd v. The Garment Services Group Ltd (formerly Feathergift Ltd) reported in Kanag-Isvaran and Wijeratne,
ARBITRATION LAW IN SRI LANKA, 289 (2006).

12
 It is conceded by the UNCITRAL Rules that the mandatory provisions of the lex arbitri will
prevail over the rules if they are in conflict.79 An example of a mandatory provision of the law applicable
to the arbitration from which the parties were held to be incapable of derogating is the decision in
Fincantieri-Cantieri Navali Italiani Spa (Italy) v. Ministry of Defense, Armament and Supply Directorate
of Iraq, Republic of Iraq,80 in which Iraq objected to an Italian Court exercising jurisdiction in an action
commenced by an Italian company claiming damages for breach of a contract for delivery of corvettes for
the Iraqi navy. Court refused the application made by Iraq to refer the matter for arbitration in terms of the
UNCITRAL arbitration clause on the ground that the dispute was not arbitrable following the United
Nations embargo against trading with Iraq following the Iraqi invasion of Kuwait, and proceeded to
assume jurisdiction and try the case. The same point is illustrated by Saipem SpA v. Bangladesh Oil Gas
and Mineral Corporation,81 which is a more controversial decision in which the Supreme Court of
Bangladesh affirmed the decision of the lower Court to revoke the authority of an arbitral tribunal on the
ground that the tribunal had conducted the arbitration proceedings improperly by refusing to determine
the question of admissibility of evidence and the exclusion of certain documents from the record in
manifest disregard of law so as to cause a miscarriage of justice.

However, it is necessary to stress that there is a global trend of liberalizing the scope of objective
arbitrability as may be demonstrated by the recent decisions from various jurisdictions on the arbitrability
of inter-alia anti-trust claims,82 securities claims,83 and insolvency matters.84 In the area of anti-trust, it
has been held in the United States by the Fifth Circuit in Cobb v. Lewis that as a general matter, antitrust
claims are not appropriate subjects of arbitration.85 In reaching this conclusion, the Court followed the
reasoning of the Second Circuit in American Safety Equipment Corp. v. J.P. Maguire & Co.86 In this case
the Court emphasized the broad range of public interests affected by private antitrust claims, the
complexity of the issues, the extensiveness and diversity of the evidence, and the involvement of the very
business men whose activities are sought to be regulated by anti-trust laws as arbitrators, and concluded
that these factors render antitrust claims far better suited to judicial than to arbitration procedures.87

However, in Mitsubishi Motors Corp. v. Soler Chrysler Plymouth Inc.88 the United States
Supreme Court rejected the American Safety considerations that had been endorsed in the Cobb decision.
The Court said: We also reject the proposition that an arbitration panel will pose too great a danger of
innate hostility to the constraints on business conduct that antitrust law imposes.89 The Supreme Court
stated that it granted certiorari primarily to consider whether an American Court should enforce an
agreement to resolve antitrust claims by arbitration when that agreement arises from an international
transaction.90

79
See, Art. 1(2) of the UNCITRAL Rules, supra note 7. The lex arbitri is different from the law applicable to the merits of the
dispute, which is generally the substantive or proper law. See, James Miller & Partners Ltd v. Whitworth Street Estates
(Manchester) Ltd [1970] 1 All E.R. 796; Diefenbacher, Cour dappel Paris, 18 June 1974, Rev A 1975, 179; Compagnie
Tunisienne de Navigation SA v. Compagnie dArmement Maritime [1971] AC 572; Bank Mellat v. Helleniki Techniki [1984] 2
QB 291 and Sumitomo Heavy Industries Ltd v. Oil and National Gas Commission [1994] 1 Lloyds Rep. 45 at 47.
80
[1996] XX IYCA 594.
81
MLR [2000] AD 245.
82
See, Mitsubishi Motors Corp. v. Soler Chrysler Plymouth Inc. [1985] 473 U. S. 614.
83
See, Rodriguez de Quijas v. Shearson/American Express 490 US 477 [1989] overruling Wilko v. Swan 346 US 427 which had
initially refused to allow any claims under the Securities Act 933 to be arbitrated. See also, Shearson and American Express Inc.
v. McMahon [1987] 482 U. S. 220. For European law, see Philip Alexander Securities v. Bamberger [1997] EULR 63 [1996]
CLC (1) 757.
84
See, SONATRACH v. Distrigas 80 BR 606 (D. Mass. 1987).
85
See, Cobb v. Lewis, 488 F.2d 41 (5th Cir.1974).
86
391 F.2d 821 (2d Cir.1968).
87
Id at 827.
88
[1985] 473 U. S. 614.
89
Id at 634.
90
Id at 624 (Emphasis added).

13
 Similarly in Attorney-General of New Zealand v. Mobil Oil New Zealand Ltd91 the High Court in
New Zealand refused to stay an arbitration in respect of an anti-trust claim. In IBM Australia Ltd. v.
National Distribution Services Ltd.,92 the Supreme Court of New South Wales approved the New Zealand
decision in upholding an agreement to refer to arbitration the decision and relief to be granted under
consumer protection provisions. European Community law has developed along the same lines.93

The same trend is reflected in the Sri Lankan decision in Phil-East Asia Construction v. Galadari
Hotels (Lanka) Ltd.94 In this case, in arbitration proceedings conducted under UNCITRAL Rules, an
objection to the claim that it was time barred had been taken up by the tribunal as a preliminary matter,
and the tribunal had determined that the claim could be maintained as the provisions of the Prescription
Ordinance95 did not apply to arbitration proceedings. The respondent to the claim then filed action
seeking a declaration that the arbitral tribunal was not entitled to act upon the reference, and praying also
for an injunction to restrain the tribunal from continuing to hear the case. The original Court granted the
declaration and the injunction, but the order was set aside by the Court of Appeal which affirmed the
decision of the arbitral tribunal.

It is generally accepted that the arbitral tribunal has the competence to decide on its own
jurisdiction. As Devlin, J. put it-

It is not the law that arbitrators, if their jurisdiction is challenged or questioned, are bound immediately to refuse
to act until their jurisdiction has been determined by some Court which has power to determine it finally. Nor is
it the law that they are bound to go on without investigating the merits of the challenge and to determine the
matter in dispute, leaving the question of their jurisdiction to be held over until it is determined by some Court
which had power to determine it. They might then be merely wasting their time and everybody elses. They are
not obliged to take either of those courses. They are entitled to inquire into the merits of the issue whether they
have jurisdiction or not, not for the purpose of reaching any conclusion which will be binding upon the parties
because that they cannot do but for the purpose of satisfying themselves as a preliminary matter about whether
they ought to go on with the arbitration or not. 96

However, to avoid any uncertainty on this matter the power of an arbitral tribunal to rule on its
own jurisdiction or, as it is often put, its competence to decide upon its own competence,97 is sought to be
preserved in most legislation and rules of arbitration. It is relevant to note that Article 16(1) of the
UNCITRAL Model Law provides that:

The arbitral tribunal may rule on its own jurisdiction, including any objections with respect to the existence or
validity of the arbitration agreement. For that purpose, an arbitration clause which forms part of a contract shall
be treated as an agreement independent of the other terms of the contract. A decision by the arbitral tribunal that
the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause.

Article 21 of the UNCITRAL Rules elaborates further as follows:

91
[1989]2 NZLR. 649.
92
[1991] 100 A. L. R. 361
93
See, Eco Swiss v. Benetton [1999] ECR 1-3055.
94
Reported in Kanag-Isvaran and Wijeratne ARBITRATION LAW IN SRI LANKA, 231 (2006). The decision was affirmed by the
Supreme Court, ibid., at 241.
95
6 of the Prescription Ordinance, Legislative Enactments of Ceylon, Cap 68 (1956 Revision).
96
Christopher Brown Ltd. v. Genossenschaft Oesterreichischer Waldbesitzer Holzwirtschaftsbetriebe Registrierte
Genossenschaft Mit Beschrankler Haftung [1954] 1 QB 8 at 12-13 per Devlin, J.
97
Expressed in German as Komptenz/ Komptenz and in French as Competence de la Competence.

14
 1. The arbitral tribunal shall have the power to rule on objections that it has no jurisdiction, including any
objections with respect to the existence or validity of the arbitration clause or of the separate arbitration
agreement.

2. The arbitral tribunal shall have the power to determine the existence or the validity of the contract of which
an arbitration clause forms a part. For the purposes of article 21, an arbitration clause which forms part of a
contract and which provides for arbitration under these Rules shall be treated as an agreement independent
of the other terms of the contract. A decision by the arbitral tribunal that the contract is null and void shall
not entail ipso jure the invalidity of the arbitration clause.

3. A plea that the arbitral tribunal does not have jurisdiction shall be raised not later than in the statement of
defence or, with respect to a counter-claim, in the reply to the counter-claim.

4. In general, the arbitral tribunal should rule on a plea concerning its jurisdiction as a preliminary question.
However, the arbitral tribunal may proceed with the arbitration and rule on such a plea in their final award.

It is worth noting the following comment made by Lord Justice Megaw, in the context of a
provision of an earlier version of the ICC Rules, which had been modeled on the above quoted
UNCITRAL Rules:

The correct intention to be attributed to these rules is that a very wide jurisdiction is to be given to the arbitrator
to decide on his own jurisdiction when that jurisdiction is challenged. We see no reason why, as a matter of
construction of the words used, the Court should be alert to try to cut down the width of the intended meaning. 98

It is also heartening to note that the principles underlying these provisions have been incorporated
into the Section 11(1) of the Arbitration Act of Sri Lanka, which expressly provides that-

An Arbitral tribunal may rule on its jurisdiction including any question, with respect to the existence or validity
of the arbitration agreement or as to whether such agreement is contrary to public policy or is incapable of being
performed; but any party to the arbitral proceedings may apply to the High Court for a determination of any
such question

The Act also provides that where the jurisdiction of the tribunal has been challenged before the
High Court the arbitral tribunal may continue the arbitral proceedings pending the determination of such
question by the High Court.99 The Act also expressly provides for the severability of the arbitration
clause from the contract in which it is found when ruling upon the validity of the arbitration
agreement.100 It is relevant to note that the provisions of the abovementioned UNCITRAL Rules have
almost verbatim been incorporated into the Malaysian Arbitration Act of 2005, with the addition that a
party is not precluded from raising an objection to the jurisdiction of an arbitral tribunal by reason only of
the fact that it had participated in the appointment of the arbitrator or arbitrators.101 The other gloss made
in Malaysian Arbitration Act is the interposition of an appeal to the High Court against the order of the
arbitral tribunal in regard to its jurisdiction.102

Grant of Interim Measures

Interim measures are necessary to prevent the arbitral process becoming an exercise in futility and
to make the ultimate award that culminates the process meaningful. Interim measures vary in nature and

98
Dalmia Dairy Industries Ltd v. National Bank of Pakistan [1978] 2 Lloyds Rep. 223 at 283 per Megaw LJ.
99
The Arbitration Act, supra note 8, 11(2).
100
Id., 12.
101
18(4) Malaysian Arbitration Act, 2005, supra note 37.
102
Id., 18(8).

15
scope and take different forms. In the UNCITRAL Model Law103 and in the UNCITRAL Arbitration
Rules they are known as interim measures of protection, and in the English version of the ICC Rules
they are known as interim or conservatory measures.104 In the Swiss law governing international
arbitration they are referred to as provisional or protective measures.105 Whatever they are called, they
are intended in principle to operate as holding orders pending the outcome of the arbitral proceedings. In
a broad sense, interim measures may become necessary for the procurement of preservation of
evidence,106 for mitigating loss,107 for the protection, preservation and the maintenance of the property
which is the subject matter of the dispute, for securing enforcement of the ultimate award,108 for providing
security for costs109 and for securing interim payments.110

Article 17 of the UNCITRAL Model Law provides that:

Unless otherwise agreed by the parties, the arbitral tribunal may, at the request of a party, order any party to
take such interim measures of protection as the arbitral tribunal may consider necessary in respect of the
subject-matter of the dispute. The arbitral tribunal may require any party to provide appropriate security in
connection with such measure.111

The provision has been criticised for its narrow scope. As a leading authority on the subject put it:

The phrase necessary in respect of the subject-matter of the dispute is not amplified or explained in any way.
However, it appears to limit those interim measures that an arbitral tribunal is empowered to grant under the
Model Law to such matters as ensuring that physical evidence (for instance, of defective welding in a gas
pipeline) is preserved; or towards ensuring that appropriate orders are made for the safekeeping of property
(such as a valuable painting or a piece of Faberge jewellery) whose ownership may be in dispute. 112

The criticism is that most instances where interim measures may be considered necessary for
procuring evidence vital to a case through discovery, interrogatories or in the form of affidavits, for
minimising the loss or prejudice that might be caused to a party, for providing temporary relief to an
aggrieved party, for assisting in the enforcement of a future award, for providing security for costs or
generally for maintaining the status quo, may not fall within the ambit of the aforesaid Model Law
provision.

Section 13(1) of the Sri Lankan Arbitration Act seeks to improve on this provision by preventing
derogation of the provision through consent of parties and conferring a wide discretion to the tribunal as
regards the nature of the interim measures that can be ordered. The Section is quoted below:

An arbitral tribunal may, at the request of a party, order any other party to take such interim measures as it may
consider necessary to protect or secure the claim which forms the subject mater of the dispute. The arbitral
tribunal may also order the party making such request to provide the party ordered to take such interim
measures, with security for any expense, loss or damage that may be caused in taking such interim measures:

103
See, Art. 17 of the UNCITRAL Model Law, supra note 6.
104
See, ICC Arbitration Rules, Art. 23.
105
See, Swiss PIL Act 1987, c. 12, Art. 183.
106
Eg., where the quality of the goods must be determined before the goods are either sold or perish, or the evidence of a vital
witness who is terminally ill has to be recorded before it is too late.
107
Eg., for the sale of perishable goods at market price.
108
Eg., award attachments (especially pre attachments orders).
109
Illustrated by the decision of the House of Lords in Coppee SA v. Ken-Ren Chemicals and Fertilisers [1994] AC 38 where the
Kenyan claimant was ordered to post security for cost in an ICC Arbitration.
110
Eg., in construction and building contracts to preserve the cash flow.
111
See, also Art. 26 of the UNCITRAL Rules, supra note 7 and Art. 25 of the LCIA Arbitration Rules. (Emphasis added)
112
See, Redfern and Hunter, supra note 74 at 341.

16
 Provided however that, other than in exceptional cases, no such order shall be made except after hearing the
other parties. (Emphasis added)

While this provision clearly supplies an affirmative answer to the question whether an arbitral
tribunal should have the power to grant interim relief, the words order any other party appear to limit
the ambit of the measure to the parties involved in the arbitration. This may prevent any interim measures
being directed to a third-party such as for instance a Bank which is holding funds for and on behalf of a
party to the dispute. Furthermore, the Sri Lankan provision, which contemplates the order of the tribunal
with respect to interim measures being enforced through the High Court,113 is silent in regard to the
procedure for obtaining interim measures prior to the constitution of the arbitral tribunal.

The UNCITRAL Arbitration Rules seek to improve on the Model Law through the following
provision:

At the request of either party, the arbitral tribunal may take any interim measures it deems necessary in respect
of the subject-matter of the dispute, including measures for the conservation of the goods forming the subject-
matter in dispute, such as ordering their deposit with a third person or the sale of perishable goods. 114

The opening words unless otherwise agreed by the parties found in the Model Law have been
dropped and the word deem is substituted for the word consider, which along with the reference to
conservation of the goods and sale of perishable goods at first sight appear to provide more flexibility,
but the continued use of the restrictive phrase necessary in respect of the subject-matter of the dispute
does not really help to widen the scope of interim measures that may be ordered by the tribunal. The only
real improvement in the Rules is that it permits the making of an order against a third party, but the
question here arises as to whether a third party would be bound by the rules to which it has not agreed.

Conscious of such criticism, national legislatures have modified the said provision when adopting
the Model Law. Reference may be made by way of illustration to the Malaysian Arbitration Act, 2005
which provides that

Unless otherwise agreed by the parties, a party may apply to the arbitral tribunal for any of the following
orders:
(a) security for costs;
(b) discovery of documents and interrogatories;
(c) giving evidence by affidavit;
(d) the preservation, interim custody or sale of any property which is the subject matter of the dispute. 115

While this legislative provision is very progressive and overcomes some of the deficiencies of the
UNCITRAL Model Law and the UNCITRAL Arbitration Rules, it may still not be wide enough to deal
with unforeseen contingencies that can arise in the context of an international commercial dispute. The
question that arises is whether it is legitimate to turn to the Courts for interim measures particularly where
the arbitral tribunal itself has limitations on its power to order interim measures, or as it often happens, it
is necessary to take interim measures even prior to the constitution of the arbitral tribunal. It takes time to
establish an arbitral tribunal, and during that time, vital evidence or assets may disappear or serious
damage may occur to the subject matter of the dispute. Obviously, national Courts may be expected to
deal with such urgent maters because an arbitral tribunal that is not yet in existence plainly cannot do so.

113
13(2) of the Sri Lankan Arbitration Act, supra note 8.
114
Art. 26(1) of the UNCITRAL Rules, supra note 7. (Emphasis added).
115
19(1) of the Malaysian Arbitration Act, 2005, supra note 37. (Emphasis added).

17
 When the assistance of a Court is solicited by a party with a view of obtaining interim relief, the
opposing party may take up the position that the agreement, to refer all disputes for arbitration, the parties
have entered into, would in effect deprive the Court of jurisdiction to give such relief. Prudent drafters of
arbitration clauses in contracts or submission agreements who give their mind to the issue well in advance
may wish to expressly provide therein that, notwithstanding the agreement to arbitrate, the parties shall be
entitled at any time, both before and after the arbitration tribunal has been established, to seek urgent
interim relief or measures of protection from a competent national Court. They may also wish to add that
the right to apply to a national Court for interim relief is without prejudice to any right to apply for such
relief to the arbitration tribunal. However, most arbitration clauses or submission agreements do not
contain such elaborately drafted provisions.

The question therefore arises as to whether if a party to an arbitration agreement makes an

application for interim measures to the Court rather than to the arbitral tribunal, should this be regarded as
a breach of the agreement to arbitrate? In McCreary Tire & Rubber Co. v. Seat SpA,116 a United States
Court considered an application for interim relief as incompatible with an agreement to arbitrate. This
decision has been criticised, both within the United States and elsewhere. In Carolina Power & Light Co.
v. Uranex,117another United States district Court declined to follow McCreary, holding that nothing in
the text of the Convention itself suggests that it precludes pre-judgment attachment. The preferred view
is that an application to a national Court for interim measures should not be regarded as incompatible with
an agreement to arbitrate. It is helpful, however, if this is spelt out in the relevant law or rules of
arbitration. The UNCITRAL Model Law, for example, states categorically:

It is not incompatible with an arbitration agreement for a party to request, before or during arbitral proceedings,
from a Court an interim measure of protection and for a Court to grant such measure. 118

A similar provision is to be found in the UNCITRAL Rules, which provide that:

A request for interim measures addressed by any party to a judicial authority shall not be deemed incompatible
with the agreement to arbitrate, or as a waiver of that agreement. 119

Nevertheless, where an application is made to a national Court for interim measures, a judge may
be reluctant to make a decision that would risk prejudicing the outcome of the arbitration. 120
Furthermore, most national laws expressly provide that application should be made first to the arbitral
tribunal and only then to the Court of the seat of arbitration. This is the position taken by the Sri Lankan
Arbitration Act,121 which empowers the arbitral tribunal to take interim measures and then provides
that, if the party against whom the order is made fails to comply, the party in whose favour the interim
order has been made may request assistance from the High Court.122

In Baksons Textile Industries Ltd. v. Hybro Industries Ltd.,123 an owner of a garment factory
entered into an agreement to sell the factory along with the machinery and equipment. He subsequently
sought the assistance of Court to restrain the buyer from taking over position of the factory without
completing payment of the price in full. The original Court granted an interim injunction restring the
buyer from taking over position despite an arbitration clause contained in the agreement to sell. On appeal
to the Court of Appeal of Sri Lanka, it was contended that the Court had no power to grant an interim

116
F.2d 1032 (3d Cir. 1974) 501.
117
See, 451 F. Supp.1044 (D. Cal. 1977).
118
See Art. 9 UNCITRAL Model Law, supra note 6.
119
See, Art. 26.3 UNCITRAL Arbitration Rule, supra note 7.
120
See, Channel Tunnel Group Ltd. v. Balfour Beatty Construction Ltd.[1993] A. C. 334, 367-68.
121
See, 13(1) of the Sri Lankan Arbitration Act, supra note 8.
122
Id., 13(2).
123
Reported in Kanag-Isvaran and Wijeratne, supra note 94 283.

18
injunction in view of section 5 of the Arbitration Act which shut out jurisdiction of Court, and particularly
in view of the fact that section 13 of the Act only empowers an arbitral tribunal to order interim measures.
The Court of Appeal overruled these submissions and held that the interim injunction has been lawfully
granted in the circumstances of the case. Edussuriya, J. observed:

It is my considered view that until such time a final order resolving any dispute or an interim order is made by
the Arbitrator, a party is entitled to come before the District Court and obtain interim relief to maintain the
status quo.

The question whether a mandatory injunction would be granted by Court to compel a party to
continue with the work undertaken by it in the contract in which there is an arbitration clause, arose in
Channel Tunnel Group v. Balfour Beatty Ltd. 124 The judge who heard the case at first instance decided
that he did have the power to grant such an injunction but did not grant the injunction as the contractor
gave an undertaking to continue with the work pending the resolution of the dispute. The Court of Appeal
considered that it was an appropriate case for an injunction, but that it had no power to grant one, because
of the arbitration clause. The House of Lords held that it did have power to grant an injunction, but did
not consider it appropriate to do so in the circumstances of the case. In the course of the House of Lords
judgment, Lord Mustill highlighted the problem to which this kind of application for interim relief may
give rise. He stated:

It is true that mandatory interlocutory relief may be granted even where it substantially overlaps the final relief
claimed in the action; and I also accept that it is possible for the Court at the pre-trial stage of the dispute arising
under a construction contract to order the defendant to continue with a performance of the works. But the Court
should approach the making of such an order with the utmost caution and should be prepared to act only when
the balance of advantage plainly favours the grant of relief. In the combination of circumstances which we find
in the present case, I would have hesitated long before proposing that such an order should be made, even if the
action had been destined to remain in the High Court. 125

The English Parliament sought to clarify the law in the Arbitration Act of 1966. 126 It does so in
three provisos to section 44 of the Act that confers upon the Court powers exercisable in support of
arbitral proceedings, including the preservation of evidence, the inspection of property, the granting of
an interim injunction and the appointment of a receiver. These three provisos are as follows:

(i) If the case is one of urgency, the Court may on the application of a party or proposed party to the arbitral
proceedings make such order as it thinks necessary for the purpose of preserving evidence or assets; 127

(ii) If the case if not one of urgency, the Court will only act on the application of a party to the arbitral
proceedings made with the permission of the tribunal or with the agreement in writing of the other
parties;128 and

(iii) In any case, the Court will only act if or to the extent that the arbitral tribunal has no power or is unable for
the time being to act effectively. 129

Where the position is not spelt out as clearly as this (for instance, in the UNCITRAL Model Law)
the answer to the question of whether to seek interim relief from the Court or from the arbitral tribunal is
likely to depend upon the particular circumstances of each case. If, for example, the arbitral tribunal is
not yet in existence, and the mater is one of urgency, the only possibility is to invoke the jurisdiction of

124
[1993] A. C. 334.
125
See, Channel Tunnel Group v. Balfour Beatty Ltd. [1993] A. C. 334 at 367.
126
UK Arbitration Act, 1996 (Chapter 23).
127
Id., 44 (3). (Emphasis added).
128
Id., 44 (4). (Emphasis added).
129
Id., 44 (5).

19
the Court. In all other cases, it is appropriate to apply first to that tribunal for interim measures, unless the
matter is one of extreme urgency or the measures sought are ones that the tribunal itself does not have the
power to grant. Following the New York Convention and the UNCITRAL Model law, most national laws
require the Courts to refer a dispute to arbitration if a valid arbitration clause exists. Despite this almost
universally accepted rule, Courts may order interim measures where this is supportive of the arbitral
process and not a negation of the agreement to arbitrate.

Recognition or enforcement of the Arbitral Award

In the arena of international trade law, international commercial arbitration is preferred to

litigation mainly due to difficulties in the recognition and enforcement of judicial decisions outside the
jurisdiction in which they have been rendered. Although the judicial systems in all civilized nations are
well structured and supported by efficient mechanisms for the effective implementation of judicial
decisions within their respective territories, the recognition and enforcement of foreign judgments by
national Courts and authorities are encumbered by major limitations and deficiencies. On the other hand,
arbitral tribunals are not organized hierarchically and do not have the ability on their own to implement
their awards and orders.

Arbitral tribunals would have remained ineffective if not for the United Nations Convention on
the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention),130 which is the
most fundamental and universally accepted international convention in the field of international trade law.
Article III of this Convention provides that:

Each Contracting State shall recognize arbitral awards as binding and enforce them in accordance with the rules
of procedure of the territory where the award is relied upon, under the conditions laid down in the following
articles. There shall not be imposed substantially more onerous conditions or higher fees or charges on the
recognition or enforcement of arbitral awards to which this Convention applies than are imposed on the
recognition or enforcement of domestic arbitral awards.

This and other provisions of the New York Convention have strengthened the arbitral process all
over the world so much that it has been recently observed that:

The increase in reliance on international arbitration to resolve trans-border commercial disputes has been
nothing short of remarkable. While speed, confidentiality and efficiency are oft mentioned reasons to arbitrate,
the indisputable advantage is the enforceability of the award, i.e., under the New York Convention131

The universal application of the New York Convention has somewhat been impaired by the
possibility of a State party ratifying the Convention subject to the territoriality or commercial
reservations.132 It may be of some interest to mention that while Sri Lanka became a party to the New
York Convention without any reservation,133 Malaysia had adopted it subject to both reservations in
consequence of which the Convention on the Recognition and Enforcement of Foreign Arbitral Awards
Act, 1985 defined a convention award as an award on differences between persons arising out of a
defined legal relationship, whether contractual or not, considered as commercial under the law in force in
Malaysia made (a) in pursuance to an arbitration agreement to which the New York Convention applies;

130
UN Convention on the Recognition and Enforcement of Arbitral Awards, supra note 15.
131
Lamm and Spoorenberg The Enforcement of Foreign Arbitral Awards under the New York Convention: Recent Developments.
Paper presented at the ICC Conference on International Arbitration in New Orleans on November 5th, 2001.
132
See, Redfern and Hunter, supra note 74 at 440-443. See also, Marsoof, Recognition and Enforcement of Foreign Arbitral
Awards: Some Salient Points (2005) LCLR 27.
133
This fact is reflected in 33 of the Sri Lankan Arbitration Act, which enacts that a foreign arbitral award irrespective of the
country in which it was made shall subject to the provisions of 34 be recognized as binding and, upon application by a party
under 31 to the High Court, be enforced by filing the award in accordance with the provisions of that section.

20
and (b) in pursuance of an arbitration agreement in the territory of a State other than Malaysia which is a
party to the New York Convention.134 The Act also provided that the Yang de-Pertuan Agong may, by
order in the Gazette, declare that any State specified in the order is a party to the New York Convention,
and that order shall, while in force, be conclusive evidence that that State is a party to the said
Convention.135

The question, whether an award, made in Singapore, which is a party to the New York
Convention but was not listed in the order made by the Yang de-Pertuan Agong and published in the
Gazette in force for the time being, should be recognized and enforced in Malaysia, arose in Sri Lanka
Cricket v. World Sport Nimbus Pte Ltd.136 While the High Court answered the question in the affirmative,
the Malaysian Court of Appeal disagreed and held that the requirement of Gazetting a country as a party
to the Convention must have been intended by Parliament to be mandatory in effect. This is just one of
the many complexities that arise from the reservations that are made by State parties when ratifying the
New York Convention.

The UNCITRAL Model Law on International Commercial Arbitration137 has sought to remedy
this situation by providing in Article 35(1) thereof that:

An arbitral award, irrespective of the country in which it was made, shall be recognized as binding and, upon
application in writing to the competent Court, shall be enforced subject to the provisions of this article and of
article 36.138

Legislation on international commercial arbitration which has been fashioned on this model has
achieved greater universality by excluding territoriality and commercial purpose from its pre-requisites.

The words recognition and enforcement connote two different concepts. The decision in
Dallal v. Bank Mellat,139 shows that the recognition of an arbitral award does not always involve
enforcement, and a foreign award recognised in Sri Lanka could merely operate as res judicata with
respect to future litigation or arbitration. On the other hand, recognition is inherent in enforcement, as one
cannot enforce an award without recognising it. The United Nations Convention on the Recognition and
Enforcement of Foreign Arbitral Awards speaks of recognition and enforcement140 of foreign arbitral
awards as if the concepts are inextricably linked.141 However, it has to be remembered that the real
distinction is between recognition on the one hand and recognition and enforcement on the other, and
the Arbitration Act of Sri Lanka speaks of recognition or enforcement.142

An important feature of arbitration as a dispute resolution system is that the parties generally
intend the award that is made by the arbitral tribunal that is constituted by them to have some degree of
finality. The parties who accept the notion of finality of the award, do so in the expectation that the
arbitral proceedings would be conducted in accordance with fundamental norms of substantive and
procedural justice, unless they have authorized the arbitrators to decide ex aequo et bono. The question
arises as to the remedies a party could resort to if these expectations are frustrated by the award. Some
institutional systems and national laws may permit the parties to have an arbitral appeal, that is, an appeal

134
See, 2(1) of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards Act, 1985. This Act has since
been repealed by 51 (1) of the Malaysian Arbitration Act, 2005 supra note 37.
135
Id. 2 (2).
136
[2006] 3 M.L.J. 117.
137
UNCITRAL Model Law, supra note 6.
138
Id., Art. 35(1) (Emphasis added).
139
[1986] QB 441.
140
Articles IV and V of the UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards, supra note 15.
141
Redfern and Hunter, supra note 74 at 434.
142
34(1) of the Arbitration Act, 1995, supra note 8.

21
to a second arbitral tribunal or Court of law, more often than not on a question of law. For instance, the
English143 and Malaysian144 Arbitration Acts provide for such an appeal, but this is not a universal
phenomenon as the policy of most States have been to give finality to the award than opportunities for
correction. Significantly, the Sri Lankan Arbitration Act does not provide for any arbitral appeal, and this
makes it essential to ensure that the expected standards of justice are met and the credibility of the arbitral
process is maintained.

Courts are regularly called upon to set aside arbitral awards, and the first question that always
arises is whether they have the jurisdiction to do so. Article V(1)(e) of the New York Convention 145
clearly recognizes that an award may be set aside by the jurisdiction in which the award was made (lex
loci arbitri) and the jurisdiction of the law under which the award was made (lex arbitri). However,
Courts will generally be very much inhibited in exercising jurisdiction to set aside an award made in
another country even if the law applicable to the arbitration was the law of the forum. It is also important
to remember that Article V(1)(e) of the New York Convention146 should be read subject to Article VII(1)
of the Convention, which reads as follows:

The provisions of the present Convention shall not affect the validity of multilateral or bilateral agreements
concerning the recognition and enforcement of arbitral awards entered into by the Contracting States nor
deprive any interested party of any right he may have to avail himself of an arbitral award in the manner and to
the extent allowed by the law or the treaties of the country where such award is sought to be relied upon.

This provision can be utilized to obtain enforcement of a vacated award as is illustrated by the
decision of the French Cour de Cassation in Pabalk Ticaret Ltd. Sirketi v. S.A. Norsolor.147 In this case the
award in question was made in Vienna, and part of the award had been set aside by the Vienna Court of
Appeal. The Court of Appeal in Paris sought to give effect to Article V(1)(e) of the New York
Convention and refused to enforce the part of the award that had been set aside in Vienna. The French
Cour de Cassation set aside a decision of the Court of Appeal of Paris as Article VII of the New York
Convention recognized rights of parties under multilateral or bilateral relating to the recognition and
enforcement of arbitral awards.

Assuming that a Court of law does possess jurisdiction to set aside or refuse recognition or
enforcement of an arbitral awards, the question arises in what circumstances it could legitimately
intervene considering the obligation of each contracting party to the New York Convention under Article
III of the Convention to recognize arbitral awards made in another country. Section 26 of the Arbitration
Act of Sri Lanka provides that an award made by the arbitral tribunal shall be final and binding on the
parties to the arbitration agreement subject to the power of court to set aside an award or to refuse its
recognition or enforcement under Part VII of the Act. This means that an award made by an arbitral
tribunal may even be relied upon by any party by way of defence, set-off or otherwise in any proceedings
in any Court.148

It is important to note in this context that the New York Convention,149 the UNCITRAL Model
150
Law as well as the Malaysian Arbitration Act151 and the Sri Lankan Arbitration Act152 use the all-

143
69(2) of the UK Arbitration Act, 1996 supra note 123. Recourse to such an appeal may be expressly excluded by the parties.
144
42 of the Malaysian Arbitration Act, 2005 supra note 37. In view of 3(3)(b) of the Act, this provision will apply to an
international arbitration where the seat of arbitration is in Malaysia, only if the parties have expressly agreed to such application.
145
UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards, supra note 15.
146
Id.
147
24 I.L.M. 663 [1986], reproduced in Michael Reisman et al., INTERNATIONAL COMMERCIAL ARBITRATION 1058ff (1997).
148
as explicitly set out in 36(1) of the Malaysian Arbitration Act, supra note 37.
149
Art. V of the UN Convention on the Recognition and Enforcement of Arbitral Awards, supra note 15.
150
Art. 34(1) and (2) and 36(1) of the UNCITRAL Model Law, supra note 6.
151
37(1) and 39(1) of the Malaysian Arbitration Act, 2005 supra note 37.

22
important word only when specifying the grounds on which an arbitral award may be set aside or
refused recognition or enforcement, signifying the intention to confer as much finality as possible on the
arbitral award. The decision in Kiran Atapattu v Janashakthi General Insurance Co. Ltd.,153 illustrates the
positive judicial attitude of Sri Lankan courts in not attempting to second guess the arbitral tribunal,
particularly on questions of facts. The grounds for refusing recognition and enforcement of arbitral
awards set out in paragraphs (a) and (b) of Article 36(1) of the UNCITRAL Model Law and Section 34(1)
of the Sri Lankan Arbitration Act are in pari materia with paragraphs 1 and 2 of Article V of the New
York Convention. These grounds may be of relevance in disposing of any matter subjected to arbitration
under the UNCITRAL Arbitration Rules, particularly where it is necessary to deal with any plea as to the
jurisdiction of an arbitral tribunal that may be raised in terms of Article 21 of the said rules. The grounds
enumerated in these provisions are exhaustive, and no other grounds may be invoked. It is therefore
necessary to examine these grounds closely.

(1) Incapacity of a party

Generally incapacity could arise from causes such as death, dissolution or insolvency, but the
question of capacity presumably has to be determined by applying the law applicable to the party at the
time the incapacity occurred. This will mean that where the agreement is international in nature, capacity
of the various parties will be decided on the basis of more than one system of law. In most jurisdictions
the death of a party does not by itself discharge an arbitration agreement. The effect of the de-registration
of an Australian company whilst arbitration proceedings were pending, and its subsequent re-registration
prior to the making of the final award, was considered by the Supreme Court of Sri Lanka in the context
of enforcement proceedings in Kristley (Pvt) Ltd v. State Timber Corporation.154 Adverting to the
provision of the Sri Lankan Act which corresponds to Article 36(1)(a)(i) and 34(2)(a)(i) of the
UNCITRAL Model Law,155 the Court noted that this provision is applicable only where there was an
incapacity to which the party was subject when that arbitration agreement was entered into but does not
apply to a valid arbitration agreement, where a party later became subject to some incapacity.156

(2) Invalidity of Arbitration Agreement

Generally, the question of validity of an agreement involving two or more parties from different
countries could give rise to complex choice of law issues.157 However, Articles 36(1)(a)(i) and 34(2)(a)(i)
of the UNCITRAL Model Law158 have circumvented these difficulties by expressly providing that the
validity of the arbitration agreement has to be decided in accordance with the law to which the parties
have subjected the arbitration agreement (lex contractus). If the agreement does not give any indication in
regard to the intention of the parties with respect to this matter, the Act makes the law of the country in
which the award was made (lex fori) applicable. It is relevant to note, however, that there is a tendency to
apply the lex fori even where the agreement to arbitrate is expressly subjected to a different law.159 In the
United States of America, the Federal Arbitration Act of 1925, as subsequently amended, controls
arbitrations involving interstate or foreign commerce and maritime transactions and it also implements the
New York Convention. Recent decisions such as Pedcor Management Company Welfare Benefit Plan v.

152
34(1) of the Sri Lankan Arbitration Act, supra note 8.
153
SC Appeal 30-31/2005 decided on 22.2.2013.
154
[2002] 1 Sri L.R. 225.
155
UNCITRAL Model Law, supra note 6. The corresponding Sri Lankan provision is 32(1)(a)(i).
156
Id., at 241 (per Mark Fernando, J.). Cf, Ceylon Printers Ltd and Another v. Goonewardane and Others [1990] 2 Sri L.R. 310
in which the Court considered the effect of subsequent incapacity of a party on pending arbitration proceedings.
157
See in general, Lakshman Marsinghe, supra note 33, 9.
158
UNCITRAL Model Law, supra note 6. The corresponding Sri Lankan provision is 32(1)(a)(i).
159
See, French Consultant v. Egyptian Local Authority Award in ICC Case No. 6162 of 1990, in Collection of ICC Arbitral
Awards 1991-1995 at 75, 80-82 (Kluwer 1997). See also, Bulgarian Foreign Trade Bank Ltd. v. A.I. Trade Finance Inc., Case
No. T 1881-99; XL Insurance Ltd. v. Owens Corning [2000] 2 Lloyds Rep. 500.

23
Nations Pers. of Textiles Inc.,160 show that the provisions of the Federal Arbitration Act would override
the choice of law made by the parties with respect to the agreement to arbitrate. It is doubtful whether this
trend will be followed in the UNCITRAL Model Law countries in view of the clear language of Articles
36(1)(a)(i) and 34 (2)(a)(i) of the Model Law.

(3) Breaches of Natural Justice

According to Articles 36(1)(a)(ii) and 34(2)(a)(ii) of the UNCITRAL Model Law, 161 an award
may be set aside or enforcement may be refused if the party against whom the award is made was not
given proper notice of the commencement of arbitration proceedings or some other violation of natural
justice preventing him from presenting his case. A classic case of refusal to recognize and enforce an
award under this head is Iran Aircraft Industry v. Avco Corporation,162 where the breach of natural justice
occurred when the Iran-United States Claims Tribunal rejected a claim made by a United States
corporation on the ground that it had not submitted detailed invoices having previously indicated to that
corporation that there was no necessity to submit detailed invoices.

The proposition that an enforcement Court will not readily infer a breach of natural justice in the
context of a foreign arbitral award becomes clear from decisions such as Texaco Overseas Tankship Ltd v.
Okada Shipping Co. Ltd.163 which concerned an award made in New York in a dispute concerning a
charter party between an English company and a Japanese company. The Japanese respondent contended
that it had not been given proper notice of the appointment of the arbitrators and of the arbitral
proceedings and had been unable to present its case since all notices had been delivered to its New York
Counsel whom it had discharged. The District Court of Osaka rejected the argument finding that the
Japanese party did not inform the English party that the New York lawyer was no longer representing it in
the arbitral proceedings until after the arbitration notices had been issued, and went on to grant
enforcement.

In Parsons and Whittemora Overseas Co. Inc. v. Societe Generale de L' Industie du Papier164 the
Court held that due process rights of an American corporation under the United States Constitution, while
entitled to full force under the Convention, were not infringed by the foreign arbitral tribunals refusal
to re-schedule the hearing for the convenience of one of the witnesses of the American corporation.
Although the Court noted that an award would not be enforced if a party was not given proper notice
or was otherwise unable to present his case it concluded that the American corporation had failed to
establish either circumstance. The Court observed that the inability to present a particular witness, was a
risk inherent in an agreement to submit to arbitration given the logistical problems of scheduling a
hearing date convenient to parties and the witnesses scattered around the globe. The Court also noted, not
without significance, that the arbitrators had before them an affidavit of the missing witness. Another due
process case is Minmetals Germany v. Ferco Steel,165 where the losing respondent in an arbitration held in
China opposed enforcement in England on the ground that the award was founded on evidence that the
arbitral tribunal had obtained through its own investigations. An English Court rejected this defence on
the basis that the respondent was eventually given an opportunity to ask for the disclosure of evidence at
issue and comment on it, but declined to do so. The Court held that the due process defence to
enforcement was not intended to accommodate circumstances in which a party had failed to take
advantage of an opportunity duly accorded to it.

160
343 F.3d 355 (5th Cir. 2003).
161
UNCITRAL Model Law, supra note 6. See also, 32(1)(a)(ii) and 34(1)(a)(ii) of the Sri Lanka Arbitration Act, supra note
8.
162
(1993) 18 YCA 599.
163
(1985) 10 YCA 483.
164
508 F. 2d 969 (2nd Cir.1974).
165
Minmetals Germany v. Ferco Steel [1999] 24 YCA 739.

24
(4) Outside the Scope of Submission

The competent Court may set aside or refuse to recognise or enforce any foreign award which
falls outside the scope of the submission to arbitration, unless the extraneous part of the award can be
severed from the rest of the award.166 Generally, the Courts try to avoid usurping the arbitrators role and
second-guessing the arbitrators construction of the parties agreement,167 and it is only rarely that any
attempt to resist enforcement of an award on the ground that it is outside the submission, succeeds. Thus,
in LIAMCO v. Libya,168 Court allowed an award to be enforced despite the fact that the arbitral tribunal
had awarded a large sum as consequential damages when the contract between the parties clearly
excluded this head of damages. In the Renusagar case169 the Supreme Court of India looked into the issue
of going outside the submission, in the context of a domestic arbitration, but the principles enunciated in
that case are applicable equally to a foreign award. In this case General Electric was successful in
resisting the various attempts made by Renusagar to challenge the ICC arbitration proceedings as well as
the ultimate award entered in India on the ground that they fell outside the scope of the submission. The
decision in Hatton National Bank Limited v Casimir Kiran Atapattu and Another170 fell on the other side
of the line, and the Supreme Court of Sri Lanka did not hesitate to rule that the arbitral tribunal has
overstepped the limits of its mandate and has sought to deal with a dispute not contemplated by or not
falling within the terms of the submission to arbitration. The Supreme Court accordingly severed the part
of the award that dealt with matters beyond the scope of the submission to arbitration from the part of
the award which was within the mandate of the tribunal, and ordered the enforcement of only the latter
part.

(5) Improper Composition of Tribunal or Arbitral Proceedings

The issue of propriety comes into focus in Articles 36(1)(a)(iv) and Section 34(2)(a)(iv) of the
UNCITRAL Model Law.171 The question whether the arbitral tribunal was properly constituted or
whether the tribunal followed the correct procedure has to be decided in the light of the provisions of the
arbitration agreement. It is expressly provided in the Model Law that if there is no provision in the
agreement, these issues should be resolved in accordance with the law of the country where the arbitration
took place (lex fori).172 While the question whether the tribunal has been properly constituted would
generally involve the construction of the relevant arbitration agreement, more often than not, the failure to
raise the issue before the tribunal could defeat the objection at the stage of enforcement.173

(6) Awards that are not Binding

Article 36(1)(a)(v) of the UNCITRAL Model Law174 empowers the Court to refuse recognition or

166
See, Articles 36(1)(a)(iii) and 34(2)(a)(iii) of the UNCITRAL Model Law, supra note 6. The corresponding Sri Lankan
provisions are 32(1)(a)(iii) and 34(1)(a)(iii) of the Arbitration Act, supra note 8. See also Michel, J. Mustill and Stewart C.
Boyd, THE LAW & PRACTICE OF COMMERCIAL ARBITRATION IN ENGLAND, 115 and 424 -425.
167
Parsons Whittemore Overseas Co. Inc. v. Socit Gnrale de l Industrie du Papier (RAKTA) 508 F 2D 969 (2ND CIR.
1974).
168
Libyan American Oil Co v. Socialist Peoples Libyan Arab Jamahirya, formerly Libyan Arab Republic [1980] 20 ILM 1;
[1982] 7 YCA 382.
169
Renusagar Power Co Ltd v. General Electric Co. A.I.R. 1985 SC 1156; General Electric v. Renusagar Power Co. [1987] 3
SCR 858.
170
SC Appeal No 38 - 39/06 decided on 25.06.2013.
171
UNCITRAL Model Law, supra note 6. The corresponding provisions of the Sri Lanka Arbitration Act are 32(1)(a)(iv) and
34(1)(a)(iv).
172
Id., Art. 36(l)(a)(iv) and Art. 34(2)(a)(iv).
173
See, China Nanhai Oil Joint Service Cpn v. Gee Tai Holdings Co. Ltd. 20 (1995) YCA 671.
174
UNCITRAL Model Law, supra note 6. See, 34(1)(a)(v) of the Sri Lankan Arbitration Act, supra note 8.

25
enforcement to a foreign award which has not yet become binding on the parties or has been set aside or
suspended by a Court of the country in which, or under the law of which, that award was made. Article
36(2) provides that if a request to set aside or suspend the award has been made in the country where the
award was made, the competent Court may stay enforcement proceedings provided that the party
challenging the award posts a bond or other form of security. An issue of considerable controversy is
whether a Court should invariably refuse enforcement if the award has already been set aside in the
country where it was made. In the Hilmarton case175 a French Court was willing to enforce an award that
has been set aside in Switzerland, and an American Court in Chromalloy Aeroservices Inc. v. Arab
Republic of Egypt176 did the same with an award that had been set aside in Egypt. These decisions show
that refusal of recognition and enforcement does not necessarily follow from the setting aside of the
award in the country in which it was made, and an enforcing Court may claim a residual discretion in this
regard.177

It is submitted that the residual discretion of Court has to be exercised with caution. Experience
has shown that while the use of the discretion in situations where the presence of a ground for refusal of
enforcement is so trivial that it is covered by the de minimis rule, or where the respondent is guilty of
acquiescence having failed to raise timely objection before the arbitral tribunal, do not give rise to any
controversy, the use of the discretion by Court in other circumstances, has given rise to serious problems
involving consistency and uniformity.

(7) Arbitrability

Apart from the grounds discussed above, there are also the question of arbitrability and public
policy which are dealt with respectively in Sections 32(1)(b)(i) and 34(1)(b)(i) of the Arbitration Act of
Sri Lanka which are fashioned on Articles 34(b)(i) and 36(b)(i) of the UNCITRAL Model Law. 178 The
question of arbitrability has already been discussed at length, and it would suffice if it is stressed here that
it is not always correct to assume that all disputes arising out of an illegal contract are incapable of being
settled by arbitration. Where the arbitration agreement itself is unaffected by the illegality, the arbitrator
can, and must, rule on any question of illegality. It may be that if he makes an award which has the effect
of enforcing an illegal contract or which offends against public policy, the Court will set it aside or refuse
to enforce it at any rate if the illegality or offence against public policy is apparent on the face of the
award. But if the arbitrator makes an award giving effect, even wrongly, to a defence of illegality, the
award is within his jurisdiction and a complete answer to a fresh claim on the same facts.

(8) Public Policy

Under Articles 36(1)(b)(ii) and 34(2)(b)(ii) of the UNCITRAL Model Law179 it is a defence to the
enforcement of an arbitral award that such enforcement would contravene the public policy of the
enforcing State. This provision would be invoked where the enforcement could violate the forum States
most basic notions of morality and justice.180 As Lord Donaldson MR put it, it has to be shown that there

175
Hilmarton Ltd. v. Omnium de treatment et de valorisation (OTV) Revue de larbitrage (1995) 20 YCA 663.
176
939 F. Supp 907 (District of Colombia 1996).
177
See, Quinhunangdao v. Million Basic Co [1994] 19 YCA 675, (Hong Kong No.7 sub I) in which the Hongkong High Court
declared that it retains a residual discretion to grant leave to enforce in any case. This view has subsequently been followed in
several cases by the High Court in Hong Kong. See, Poklito v. Klockner [1994] 19 YCA 664 (Hong Kong No.6 sub 44 -50) ;
China Nan Hai Oil v. Gee Tai Holdings [1995] 20 YCA 671 (Hong Kong No.8 sub 1); Nanjing Cereals v. Luckmate
Commodities [1995] 21 YCA 542, (Hong Kong No.9 sub 2). A similar trend is noticeable in the United States decisions as well.
See, Shaheen v. Sonatrach [1983] 585 F 5upp 57:affd, 733 (1984), F 2d 260; [1985] 10 YCA 540 (US No.10).
178
UNCITRAL Model Law, supra note 6.
179
Id., The corresponding provisions of the Sri Lankan Act are 32(1)(b)(ii) and 34(1)(b)(ii) of the Sri Lankan Arbitration Act,
supra note 8.
180
See, Parsons & Whittmore Overseas Co. Inc v. Societe Generale de L' lndustrie du Papier (Rakta) [1974] 508 F 2d 969, 974.

26
is some element of illegality or that the enforcement of the award would be clearly injurious to the public
good or, possibly, that enforcement would be wholly offensive to the ordinary reasonable and fully
informed member of the public on whose behalf the powers of the State are exercised.181 In Light Weight
Body Armour Ltd. v. Sri Lanka Army182 the Supreme Court of Sri Lanka observed that the concept of
public policy encompassed fundamental principles of law and justice in substantive as well as
procedural aspects.183 In Kiran Atapattu v Janashakthi General Insurance Co. Ltd.,184 the Supreme Court
stressed that while the dynamism of the concept of public policy cannot be denied, it is important to
exercise extreme caution in applying the concept.

The parameters of the exception of public policy have been explored by almost all jurisdictions
faced with the enforcement of foreign arbitral awards. The notion has been criticised as been too
subjective and protective. However its value lies in the need to reconcile business efficacy with notions of
good conduct and morality. The issue was considered by the Supreme Court of India in the Renusagar
case185 in which the Court looked into the question whether the failure to obtain the prior approval of the
Government of India or its Central Bank for the purpose of certain foreign currency dealings was contrary
to the public policy of India. On the facts of the case the Supreme Court held that the award did not
violate the Indian public policy, but did not rule out the possibility of an award being denied enforcement
for violation of public policy. The defence also failed in the Sri Lankan case of Kristley (Pty) Ltd v. State
Timber Corporation186 and the Malaysian case of Harris Adacom Corp. v. Perkom And Bhd.187

It is necessary to refer to one difficulty that has arisen in the recognition and enforcement of
interim awards or orders of arbitral tribunals which do not amount to a final award within the meaning
of the New York Convention. In Resort Condominium International Inc v. Bolwell,188 certain interim
measures were ordered by an arbitral tribunal sitting in the United States, and enforcement was sought in
Australia. The Australian Court refused enforcement on the ground that this was not a final decision. The
Court was of the view that an interlocutory order which may be rescinded, suspended, varied or
reopened by the tribunal which pronounced it, is not final and binding on the parties. It was also
suggested that the interim award is contrary to public policy. Though logical, this decision may be
criticised as not being consistent with the supportive role of the judiciary with respect to international
commercial arbitration. With a view of overcoming this difficulty, some legislation now require that
interim measures or other orders made by arbitral tribunals be couched as awards, or make the
provisions on enforcement of awards applicable to any order of a tribunal seeking to provide interim
measures.189 Arbitral practice varies on this question although so far no satisfactory system has been
evolved to ensure the recognition and enforcement of foreign awards or orders of tribunals which are not
final awards.

Although Sri Lanka is a party to the Convention on the Settlement of Investment disputes
between States and Nationals of other States,190 it is not all that clear whether an award made by the

Adopted in Paklito Investments Ltd v. Klockner Eost Asia Ltd [1993] 1 H.K.L.R. 89.
181
Deutsche Schachtbau - und Tiefbohrgesellschaft mbH v. Ras Al Khoimah National Oil Co. [1987] 2 Lloyds Rep 246. See
also, Re an Arbitration between Hainan Machinery Import and Export Corporation and Donald & MccArthy Pte Ltd [1996] 1
Singapore LR 34 46.
182
[2007] BALR 10.
183
Id., at 13 per Shiranee Tilakawardane, J.
184
Supra note 153.
185
Renusagar Power Co Ltd v. General Electric Co. A.I.R.1985 SC 1156; General Electric v. Renusagar Power Co. [1987] 3
SCR 858.
186
[2002] 1 Sri L.R. 225. See also Marsoof, Recognition and Enforcement of Foreign Arbitral Awards: Some Salient Points
(2005) LCLR 27 at 42-43 for a discussion of this case.
187
[1994] 4 CLJ 683.
188
See, [1993] 118 A.L.R. 655.
189
New Zealand Arbitration Act, Sch. 1, Art. 17 (2).
190
Convention on the Settlement of Investment disputes between States and Nationals of other States, done on 18th March 1965,

27
International Centre for the Settlement of Investment Disputes (ICSID) can be enforced under the Sri
Lankan Arbitration Act.191 Even if one assumes that this can be done, it may still be possible to raise the
plea of Sovereign Immunity against an application for the enforcement of an ICSID award as Article 55
of the said Convention has expressly preserved the plea to the extent it is present in the legal system in
which it is sought to be enforced. Although Sri Lanka has been involved in two major ICSID arbitrations,
there has been no occasion to test whether an ICSID award can be enforced against Sri Lanka under the
Sri Lankan Arbitration Act of 1995.

In the first of these cases, AAPL v Sri Lanka,192 ICSID assumed jurisdiction over the dispute on
the basis of a bilateral investment treaty as opposed to an arbitration clause or agreement between the
parties. The claimant was a Hong Kong based company which claimed damages for alleged damage
caused to its prawn farm in the east coast of Sri Lanka in the course of military operations by Sri Lankan
armed forces. Sri Lanka argued that the action was required as the separatists had used the farm as a
sanctuary. The ICSID tribunal made an award of damages on the basis that as the prawn farm was
situated in territory in the control of the Government, Sri Lanka was bound in law to protect the interest of
the foreign investor. The award has been criticised mainly on the basis that the Tribunal had wrongfully
assumed jurisdiction,193 but the award was honoured by Sri Lanka.

The other case is Mihaly v Sri Lanka,194 in which a Canadian company claimed damages arising
from the alleged failure of the Government of Sri Lanka to proceed with a project for the construction and
maintenance of a coal powered thermal electric power plant in Trincomalee on the basis that it had
expended considerable sums of money as initial expenses for making feasibility studies and finding
financiers in terms of Memoranda of Understanding signed with the Government. In the absence of any
Bilateral Investment Treaty between Canada and Sri Lanka, the Canadian company purported to transfer
all its rights and obligations to a United States company which made the claim before ICSID relying on
the USA Sri Lanka Bilateral Investment Treaty. Sri Lankas objected to ICSID jurisdiction on the
ground that the dispute was not an investment dispute. Upholding the objection, the arbitral tribunal
characterised the dispute as a pre-investment dispute, obviating the need to go into the validity of the
purported assignment of rights and obligations to the United States company. The decision also avoided
Article 55 of the ICSID Convention being put to the ultimate test at the stage of enforcement.

Conclusions

The exploration undertaken in the preceding pages was by no means exhaustive, but it has
provided insights as to how the judiciary has approached the arbitral process whenever it was invited or
compelled to intervene. In this context, it is necessary to highlight two points. Firstly, the advantage
international commercial arbitration may have had in the past over international litigation may be
diminishing because law reform undertaken in many nations have improved the efficiency of the judicial
process and even made it less costly. On the other hand, there is a growing tendency for the arbitral
process to duplicate the judicial, and in at least some instances, arbitration proceedings have become
excessively protracted and expensive. As Lord Mustil put it:

475 UNTS 195.

191
Supra note 8.
192
17 Yearbook of Commercial Arbitration (1992) 106.
193
M.Sornarajah, ICSID Involvement in Asian Foreign Investment Disputes; The AMCO and AAPL Cases, (1995) 4 Asian
Yearbook of International Law, page 69.
194
(2002) 17 ICSID Review FILJ 142; (2002) 41 ILM 862. The author was the Senior Sri Lankan Counsel representing Sri
Lanka in the hearings held in London and Washington, D.C.

28
 It is to my mind undeniable that international commercial arbitration faces some serious problems. At least in
its larger manifestations it can be too slow, too formalized and too expensive. It also lacks the procedural teeth
which are the prime advantage of the Courts. Nobody has yet discovered why the dinosaurs became extinct, but
it is a reasonable surmise that their bulk was a significant factor.195

Secondly, there is some disillusionment about the arbitral process owing to allegations of
corruption and conflict of interest not being properly dealt with. It is therefore necessary to enhance the
credibility of the arbitral process by cleansing the system through effective codes of conduct and
disciplinary procedures for arbitrators and practitioners. It is only by remedying such maladies that the
arbitral process can be protected from adverse judicial interventions.

The UNCITRAL Model Law is unique in that it gave some opportunity for developing countries
to participate in it formulation and development, and its greatest contribution to the efficacy of
international commercial arbitration was its harmonizing zeal and the ability to influence and inspire
legislation in developed and developing nations. It combined well with the UNCITRAL Arbitration Rules
to effectively reconcile policy and pragmatic considerations with the concept of party autonomy thereby
helping to develop a positive judicial attitude towards the arbitral process. The hallmark of international
commercial arbitration has been its ability to overcome laws delays through procedures that the parties
themselves can lay down, while reducing the cost of international litigation.

The positive attitude adopted, and the deep respect shown, by the courts towards arbitration in
recent times has facilitated the implementation of agreements to arbitrate. Courts have also exercised
caution in interfering with the arbitral process, and acknowledged that the role of the judiciary has
necessarily to be supportive. As Reymond observes, it is increasingly realised in international arbitration
circles that the intervention of the Courts is not necessarily disruptive of the arbitration. It may equally be
definitely supportive .196

It would therefore be apt to conclude by reiterating the following comment made by Lord
Wilberforce in the course of his speech during the second reading of the Arbitration Bill in the House of
Lords:

I have never taken the view that arbitration is a kind of annex, appendix or poor relation to Court proceedings. I
have always wished to see arbitration, as far as possible, and subject to statutory guidelines no doubt, regarded
as a freestanding system, free to settle its own procedure and free to develop its own substantive law 197

195
See, Mustill, supra note 3.
196
See, Claude Reymond, The Channel Tunnel Case and the Law of International Arbitration 109 L. Q. R. 337, 341.
197
Hansard, House of Lords Debates, col. 778 (January 18, 1996).

29