Hague Academy of International Law

Recueil Des Cours, Collected Courses, Tome 452

Massimo V. Benedettelli, Power(s) in International Arbitration, Balancing Party Autonomy and State Sovereignty Through Arbitral Authority International arbitration can be viewed as a power game among different actors, where the interest of business in self-regulation intersects and potentially clashes with the interest of States in protecting unwaivable principles of adjudication and policies pursued in the governance of national markets. In a world of fragmented normativity, however, the ensuing need to balance party autonomy and State sovereignty may find different answers depending on the regimes applicable from time to time in light of the links a dispute has with different legal systems. In fact, since powers are granted by law which determines their function, scope, and effects, in cross-border situations their regulation necessarily stems from a variety of non-homogeneous sources of international law, State law, and possibly instruments of a-national rules of law. If arbitration actors wish to make an educated use of their powers, these sources and the relevant legal systems must be identified. This may be necessary in view of their coordination, which raises different problems depending on whether the power to prescribe, the power to adjudicate or the power to enforce are at hand. Arbitral tribunals may deal with them on a more rational basis if guided by certain general principles embedded in their mandate (taking private autonomy seriously, safeguarding the effet utile of their activity, considering the parties' legitimate expectations) and if they use private international law techniques. Identifying the legal systems of reference in a given case may also lead to detect forum and law shopping opportunities, which parties can self-servingly exploit in view of regulatory arbitrages, and States can contrast when leading to the elusion of mandatory regimes. At the epicentre of this tension, arbitral tribunals could find inspiration for managing it by looking at how the European Union allocates normative and adjudicatory powers in three areas of legal intercourse where private and public interests easily overlap and conflict (companies, financial markets, and insolvencies). Leveraging their authority to virtuously combine forum and law shopping with the safeguard of State sovereign prerogatives, arbitral tribunals would enhance the legitimacy of international arbitration.