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The final question addressed in chapter three is one that continues to arise in practice and to engender debate: the authority of a truncated tribunal to proceed to issue a final award. The issue comes to the fore when a party-appointed arbitrator resigns or otherwise refuses to participate in panel deliberations, whether unilaterally or at the behest of his or her appointing party. The jurisprudence on this topic has developed significantly with the trend towards judicial (rather than diplomatic) arbitration, in large measure as a result of a series of decisions by the Iran-United States Claims Tribunal and the confrontation of this problem in arbitral rules. There is a discernible preference among tribunals, institutions, and scholars to replace the obstructionist arbitrator and thereby prevent the need for a truncated tribunal. Where this is not in the circumstances feasible, the authority of the remaining two members to proceed to a final determination is widely accepted. Either way, the trend has been to continue to fortify international arbitration against unilateral attempts to derail the proceedings.
One of the most striking features of arbitral practice over the past three decades has been how old problems have continued to arise in new guises. This is particularly apparent with the problem of States’ various attempts to negate arbitration, and whether denial of justice may be invoked to confront that practice. This issue is considered in the second chapter of this book. The practice since the time of the first edition of this book underscores that governmental evasion and negation of arbitration can take a number of forms. Arbitral tribunals, and in particular those constituted under bilateral investment treaties, have responded to new attempts at governmental negation of arbitration. The question today is not only whether a State’s refusal to arbitrate may constitute a denial of justice, but whether a State’s attempt to negate arbitration—by, for example, improperly setting aside an international award—may constitute a compensable expropriation of property rights, a breach of fair and equitable treatment, or another breach of an investment treaty.
The severability of the arbitration agreement, a cornerstone principle of international arbitration that is considered in the first chapter of this book, is more firmly established now than it was three decades ago. Yet respondents still from time to time call that principle into question by attempting to vitiate the arbitral process by invoking a (supposed) defect in the underlying contract or treaty, while difficult issues also remain concerning the precise scope and limits of the principle. These issues underscore the merit in analyzing and revisiting what remains a jurisprudentially subtle and practically important question.
The vitality or, alternatively, vitiation of the international arbitral process remains a pressing subject. The explosion of inter-State, investor-State, and international commercial arbitration in recent years magnifies the importance of the subject. This second edition combines the historical analysis of the first edition with a survey of the continued salience and contemporary developments for each of the three problems identified: (i) the severability of the arbitration agreement; (ii) denial of justice (and now other possible breaches of international law) by governmental negation of arbitration; and (iii) the authority of truncated international arbitral tribunals. The international arbitral process continues to be fortified against unilateral attempts to derail it and, to that end, this book will be a valuable guide for practitioners and scholars alike.
The Iran–United States Claims Tribunal (Tribunal) has functioned in the Hague since 1981. To date, the Tribunal has completed its work in over thirty-nine hundred cases, making it one of the most significant claims settlement efforts in history. Remaining on the Tribunal’s docket are several very large and complex claims between the Islamic Republic of Iran and the United States of America.
The International Court of Justice issued its judgment on the merits in the case of Military and Paramilitary Activities in and Against Nicaragua on June 27, 1986. A public discussion to mark the twenty-fifth anniversary of the rendering of that judgment took place in The Hague on June 27, 2011. The meeting—“The Nicaragua Case 25 Years Later: Its Impact on the Law and the Court”—was arranged with the participation of individuals involved in the formulation and presentation of Nicaragua’s case. A diversity of views was expressed on whether the Court had jurisdiction in the case and on elements of its judgment on the merits, but the mood of the Hague session was celebratory.
When asked to prepare this paper about the judgment of the International Court of Justice in the case concerning the Gabčíkovo-Nagymaros Project (the Project) as an element of practice in the settlement of international water disputes, I replied that the questions put to the Court by the parties in that case, and the Court's answers to those questions, involved more than disposition of a water dispute. Nevertheless the case is of interest to the present proceedings.
Background of the case
In 1977, the Hungarian People's Republic and the Czechoslovak People's Republic concluded a treaty (the 1977 Treaty) for the construction and operation of a system of Danube River locks as a “joint investment.” That investment was essentially aimed at the production of hydroelectricity, the improvement of navigation in that section of the Danube, and the protection of areas along the banks against flooding. The parties at the same time undertook to ensure that the quality of water in the Danube was not impaired as a result of the Project, and that obligations for the protection of nature arising in connection with the construction and operation of the system of locks would be observed. Navigational and fishing interests were also to be protected.
In these days of proliferation not only of international litigation but of international courts, there may seem room to question the utility of establishing another court of the kind just proposed by Howard Holtzmann: an international court to resolve disputes which arise over challenges to the validity of international commercial arbitral awards.
Judge Holtzmann's proposal would, inter alia, remove from national courts the decision which today is theirs under the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards to decide on the specified, limited grounds on which recognition and enforcement of an arbitral award may be refused under the Convention. Among those grounds is whether the subject-matter of the dispute is not capable of settlement by arbitration under the law of the State in which the national court sits, and whether recognition or enforcement of the award would be contrary to that State's public policy. The new International Court of Arbitral Awards would have exclusive jurisdiction to determine all these questions. But execution of its decisions will necessarily still rest with national authorities.
Is there a need for such a new court? There is, by way of notable example, no reason in principle why the International Court of Justice cannot resolve disputes about the validity of international arbitral awards, if those disputes arise on, or are raised to, the inter-State level – as, exceptionally, some such disputes have or have been.