European Public Policy in Commercial Arbitration: Bridge over Troubled Water?
| Author | Olivier Van Der Haegen |
| Published date | 01 December 2009 |
| Date | 01 December 2009 |
| DOI | http://doi.org/10.1177/1023263X0901600404 |
| Subject Matter | Article |
16 MJ 4 (2009) 449
EUROPEAN PUBLIC POLICY IN
COMMERCIAL ARBITRATION:
BRIDGE OVER TROUBLED WATER?
O H*
ABSTRAC T
is Ar ticle aims to analyse the foundations, the concept and the practical implications
of European public policy on commercial arbitration. It starts with a detailed analysis of
the ECJ’s Ec o Swiss judgment , which decided on the public policy character of Article 81
EC in the context of arbitration. e reasoning followed by the Cour t is scr utinised and
used as a way to understand better the concept of European public policy and to limit its
consequences on arbitration. e author examines the relationship both between European
public policy and the New York Convention, and national arbitration practices . A parallel
is also drawn with the publi c policy exception under the regime of Brussels I Regulation.
e principal questions address ed concern what European public policy should encompass
in an arbitration context, whe ther there is a duty for arbitrators to apply European public
policy of their own motion and the level to which awards, that allegedly misapplied
European public policy, should be scrutini sed.
Keywords: European Public Policy; Commercial Arbitr ation; Duty to Raise Community
Law ex oc io; Scope of Review of Awards by National Cour ts; EC Competition L aw in
Arbitration; EU Consumer Law in A rbitration
* LL.M. ca ndidate (University of Chic ago Law School); LL.M. (Col lege of Europe, Bruges).
is cont ribution is made on t he basis of my maste r’s thesis, which was completed and presented in
May 2009 at t he College of Europe, i n Bruges. I would l ike to thank Ha nnah Bill for he r valuable help.
I also w ish to express my gratitude to the Belgian American Educ ational Foundati on for enabling me
to pursue my studies i n the eld of internationa l business law at the University of C hicago Law School.
e usual dis claimer applies.
Olivier van de r Haegen
450 16 MJ 4 (2009)
§1. INTRODUCTION
In its Eco Swiss judgment, decided w ithin the framework of arbitr ation, the ECJ ruled
that Article 81 EC had to be considered a s a public policy provision.1 As a consequence,
Member State’s courts will have to set aside and ref use enforcement of arbitra l
awards r unning counter fundamental European law rules. is has c aused authors to
consider t hat, through its d ecision, the ECJ created a specic European public policy
or Community publ ic policy. e Eco Swiss judgment has therefore been ass erted as
having ‘constitutional underpin nings’ and as being of signicant relevance to the course
of ‘ building up the Com munity legal order’.2 But t he function of public policy in the
specic context of commercial arbitration has long been the subject of controversy. ere
is a tension between, on the one ha nd, a private dispute resolution mechanism based on
the free choice of the parties regardi ng which law should be applied and how the dispute
should come to an end and , on the other hand, the ack nowledgement of the right of the
State and its courts to exercise ulti mate control over the arbitral process. P ublic policy is
used in arbitration law to resolve this tension: by constit uting the last point of resistance
to the autonomy and libera lism of arbit ration, it enables the most f undamental public
interests to be safeguarded. 3 However, it is a concept characterised by uncertainty and
unpredictabilit y; it needs therefore to be used with great circumspect ion. As the famous
aphorism sounds, public policy is ‘a very unr uly horse and when once you get astride it
you never know where it will c arry you’.4 In the aermath of the ECJ’s judgment, public
policy has increasingly been relied upon when EU law was concerned in arbitration. As a
consequence, it seems more and more dicult to contend, at least in Europe, t hat public
policy ‘plays a greater role in the theor y of arbitration than in practice.’5
e rst part of this Article will consist of a detailed analysis of the Eco Swiss judgment
and its underlying principles (§2). en, the concept of European public policy w ill be
assessed. Before answering the question of what this concept should encompass in the
arbitration context, the relationship both between European public policy a nd the New
York Convention, and national arbitration practices will be exam ined. A parallel w ill
also be drawn with the public policy exception under the regime of Brussels I Regulation
(§3). e last part will focus on the impor tant practical consequence s Eco Swiss has for
commercial arbitration. Two quest ions, on which the ECJ did not expressly rule, will
1 Case C-126/97, Eco Swiss China Time Ltd . v. Benetton Internationa l NV, [1999] ECR I-3055.
2 Komninos, ‘Case C-126/97, Eco Swis s China Time Ltd v. Ben etton Inte rnational NV’, 37 C.M.L.Rev.
(2000) 477–478.
3 Caprasse, Hanot iau, ‘Public Policy in International Commercial Arbit ration’, in E. Gaill ard and D. Di
Pietro (ed.), Enfo rcement of Arbitra tion Agreements and Internatio nal Arbitral Awards, e New York
Convention In Pract ice, London, Cameron May, 2008 , p. 787.
4 J. Burrough in the case Rich ardson v. Mellish (1824), cited by Mills, ‘e Dimensions of Public Polic y in
Private Internat ional Law’, 4 Journal of Priv ate International Law (20 08), 203.
5 Böckstiegel, ‘P ublic Policy a s a Limit to Arbitration a nd its Enforcement’, 2(1) Disp ute Resolution Int.
(2008) 123.
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