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                   *       EUROPEAN        *
                       *      ARBITRATION      *
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                   *       issue  2.       *
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                                                    February 29th, 1996.
CONTENTS:

     1.  Introductionbsp; Introduction
:
     2.  Diary of Arbitral Events.

     3.  News items.

     4.  Feature article: "The Supra-Legal Basis of the New York Convention,
                           A Reflection." by Geoffrey Beresford Hartwell.
 

                      +++++++++++++++++++++

1. INTRODUCTION:

     Issue 1 was kindly received by the readership. Thank you. The
subscription list continues to grow. Thank you to our new subscribers for
their confidence.
        This issue sees an enlarged Diary of Events, far more purely
'training' events are included. I had thought of trying to segregate the
'training' and the 'learned discussions', but there will always be overlap.
What do readers think?
        We have the usual collection of a few news items, ... and ...
    t>     Also, as an experiment, this issue includes a longer 'feature' article
as the final item. This was kindly contributed by Geoffrey Beresford
:Hartwell (Deputy Chairman of the Chartered Institute of Arbitrators). He has
been invited to expand on the theme of this article at a meeting of one of
the Institute's Branches in Lille (northern France) on the weekend of May
25-26th (see Diary of Events in section 2).
        A case not dissimilar to the one referred to in his article is
discussed (and the expurgated award reproduced) in Wetter, J.G. (1994),
'Issues of Corruption before International Arbitral Tribunals: The Authentic
Text and True Meaning of Judge Gunnar Lagergren's 1963 Award in ICC Case
No.1110', in: Arbitration International _10_(3), 277-294.

                                         Michael Chapman
                                    &nbsnbsp;       Publisher.
mchapman@zen.dedal.fr.net
 

                      +++++++++++++++++++++

2. DIARY OF EVENTS:

        All contributions to this DIARY are welcome. It is intended both to
be of use to the individual arbitrator in Europe and also to those that have
to plan or schedule meetings.
        Generally, listed meetings will be of at least half-a-day's and more
:likely a full day's duration. Evening meetings, etc., are only likely to be
of geographically local interest.
        Also -subject to reader feedback- the emphasis is European. Trying
to cover one of the World's regions is considered ambitious enough! However
as the Diary is intended to help in scheduling meetings, it will include
major world events (no neat definition of that, editor's subjectivity I
fear!).

All these dates are 1996:                PLEASE see important note below,
----------------t>
-------------------------                  before using any of this info.
 

March 4      'Procedural Issues and Pitfalls in International Commercial
             Arbitration', Centre for Commercial Law Studies, Queen Mary &
             Westfield College, London.
              t: 00441-719.755.123, f: 00441-719.801.079.

March 22-23  CIArb, Entry Course, Loughborough, England.

March 29     Conference on Mediation, WIPO, Geneva.

April 6-7         (Easter weekend)

:April 13-15  CIArb, Entry Course, Bahrain.
April 15-17  CIArb, Special Fellowship Course, Bahrain.

April 19-21  CIArb, Special Fellowship Course, Maidstone, England.

April 26-27  CIArb: Adjudication Training.

May 3-5      LCIA European Council Symposium Tylney Hall, Hampshire,
        &sp;        England.

May 11       CIArb, Revision Seminar.

May 17-18    CIArb, Entry Course, Loughborough, England.

May 18-19    CIArb, Fellowship Assessment Course, Loughborough, England.

May 23       CIArb Branch Officers' Meeting, London.
              -internal ('closed') administrative meeting.

May 23       CIArb Annual General Meeting, London.
              (Members' formal business meeting.)

May 24-26    European Branch of the CIArb. Biannual Meeting, Lille.
:             Friday evening until Sunday lunchtime.
             Open to all members of the CIArb.
             Contact: M Chapman on: mchapman@zen.dedal.fr.net

May 28-29    Mediation Training, WIPO, Geneva
May 30-31    Mediation Training, WIPO, Geneva.

May 31       Annual one-day seminar. New Hall, Cambridge, England.
             East Anglian Branch CIArb. R H Plascow 00441-223-364.422.

June 13-16   Institute of International Business Law and Practice (IIBLP)
              Workshop on:  "International Commercial Arbitration", Paris.
             Many distinguished speakers, the Chairmen include: Pierre
             Lalive, David Sarre, Serge Lazareff, Lord Mustill, and
             Pierre Karrer.

June 13-15   CIArb, Annual Meeting,
             Tudor Park Hotel, Maidstone, Kent, England.
            Please NOTE that whilst the conference includes a visit to
             Penshurst Place, the conference is in Maidstone, and not as
     &np;           stated in the last issue of EA.
             (see also: http:\\ourworld\compuserve\homepages\hartwell )

:June 19      CIArb / LCIA / Worshipful Company of Arbitrators.
             'Cost Effective Arbitration - Meeting the User's Needs -
             The Options for the User', London.
             Speakers to include: Prof.Bockstiegel, Lord Ackner and
             Sir Michael Kerr.  (Details from CIArb, see below.)

June 21-22   CIArb, Entry Course, Loughborough, England.

June 24-28   International Congress of Maritime Arbitrators, Paris.
             (contact LMAA, London Maritime Arbitrators' Association.)

June 27-28   LCIA, Conference and Symposium.   Bermuda.

June 27-29   CIArb, Entry Course, Bermuda.

June 28-30   CIArb, Special Fnbsp; CIArb, Special Fellowship Course, London.

July 1-3     CIArb, Special Fellowship Course, Bermuda.

July 12      CIArb: Adjudication Training.

Aug. 30
 -Sept. 1    CIArb, Special Fellowship Course, Vancouver.
:
Sept. 2-12   CIArb, Diploma in Int'l Comm. Arb., Summer School.
             Keble College, Oxford, England.

Sept. 26-28  CIArb, Conference.  Boston, U.S.A.
             (See also: http:\\ourworld\compuserve\homepages\hartwell)

Oct. 18-20   LCIA European Council Symposium, Potsdam, Germany.

?November    European Branch of the CIArb. Biannual Meeting, Rome.
             _possible_ dates: November 9th-10th.
             Open to all members of the CIArb.
             Contact: Dr.Ing. Renato Casalotti  (t/f: 0039-2.55700500)

November ?   CIArb, Entry Course, CypruIArb, Entry Course, Cyprus.
             CIArb, Special Fellowship Course, Cyprus.
 

Please CONFIRM all details directly with organisers, the above material is
drawn from various sources and should not be relied on by itself(!).

NO apologies are made for meetings omitted. If this Diary is to be
efficacious it needs your contributions, please. (In the same format as
:above to: mchapman@zen.dedal.fr.net)
 

contact details for multiple entried organisations:
---------------

CIArb  Chartered Institute of Arbitrators, London.
        t: 00441-718-374.483, f: 00441-718-374.185.)
       BUT NOTE CIArb Branch meetings: make direct contact with
                                      local organiser, as above.

IIBLP  Institute of International Business Law and Practice, at the
       International Chamber of Commerce, Paris.
  /tt>
        t: 00331-4953-2921, 00331-4953-2867 or 00331-4953-2853,
        f: 00331-4953-2938.
 

LCIA   London Court of International Arbitration .
        t: 00441-714-178.228, f: 00441-714-178.404

WIPO   World Intellectual Property Organisation, Geneva.
        t:0041-22-730.9111, f: 0041-22-733.5428

:
                      +++++++++++++++++++++

3. NEWS ITEMS:

Chartered Institute come on line:
     Well not quite: The Resource Centre of the Chartered Institute of
Arbitrators in London is experimenting with an Internet connection. They
stress that at the moment it should not be regarded as the speediest way of
sending in requests for documents or information.
    They are at: 71411.2735@compuserve.com

Arbitral women:
        I have been sent an intriguing questionnaire on this subject, by
Louise Barrington of the ILouise Barrington of the Institute of International Business Law and
Practice. (See end of section 2 above for contact details).
     I must admit some scepticism towards 'group' (sex, race, orientation,
etc.) views of life and the more so to questionnaires that include (Q.14)
"Do you want to be more active in arbitration than you currently are?
yes/no".
        Having said that, this is a major survey. My initial scepticism was
wrong, if you tend to similar feelings do not stop reading! There are
twenty-seven questions (many of them broken down into detailed sections).
:The results will be important. In a subject as under-researched as
arbitration they will I am sure have far wider implications than just those
of women and arbitration. So, I for one, look forward to seeing the results
of this major survey published.
     (The cut off for replies was mid-January.)

The Netherlands Mediation Institute (NMI, Stichting Nederlands Mediation
Instituut)
        has changed its address, to:
Beurs-World Trade Centre, POBox 30183, NL-3001 DD Rotterdam.
t: 0031-10-405.6989  f: 0031-10-405.5452.89  f: 0031-10-405.5452.

Lille Meeting, May 24th-26th.
        As the editor of this newsletter is also the organiser of the above
detailed meeting, he is restraining himself from over-promoting it!
        Details were in the last issue of EUROPEAN ARBITRATION, more will
follow in March's. Booking forms have been distributed (2495 FRF for the
hotel for delegates, and 1200 FRF accompanying persons, plus a sum to cover Bran
ch
overheads requested of 60 GBP (delegates) 10 GBP (accompanying persons). If
you require further details and/or a booking form, please call me.
 

                      +++++++++++++++++++++
:
4. FEATURE ARTICLE:

            THE SUPRA-LEGAL BASIS OF THE NEW YORK CONVENTION
                           A Reflection

It is often said that the process of arbitration is a creation of law. In
many jurisdictions, arr>many jurisdictions, arbitration is regulated as if it were a part of the
state legal system, private only in the sense that those taking part are not
employed by the state.  One of the consequences of this approach is the
assertion that arbitrators, even in an international context, have some
overriding responsibility to the public interest or to the concept of ordre
publique.

The New York Convention of 1958, however, is entirely consistent with a
different view. Certainly it has a link with state legal systems; it records
an agreement by subscribing states that properly made arbitral agreements
and the awards which result from them will be enforced; it recognises the
pragmatic right of states to refuse to enforce decisions which are counter
to the policy of those states.  There is nothing principled about that.
Power is with the state and one may expect, as a condition of recognition of
awards in general, that a state reserves the right not to act counter to its
own beliefs and interests.  A convention which did not accept that would
:simply not be observed in practice.

The basis of the Convention is the agreement.  Agreements are not created by
law; they are created by peolaw; they are created by people.  The principle pacta sunt servanda is not a
principle of law, although it is a principle recognised by law.  The
expression pacta sunt servanda, which lies at the root of all human commerce
and is the basis upon which commercial principles of law are built, is not
even an axiom which has to be assumed before a philosophical justification
of law can be constructed. It is quite simply a truism.  An unassailable
fact.  A mathematician would describe it as an equivalence - Pacta =
servanda, so to speak.

It is not a statement that pacts should be observed, or agreements followed.
The definition is recursive; if a bargain is not to be followed, it is
simply not a bargain.  The law of contract is about the way in which a
bargain will be enforced at law.  In certain of its aspects it may be about
the circumstances in which a party will be excused his bargain or in which a
bargain will be undone by process of law.  The law is not, however, the
source of the bargain; the nature of bargains is itself a source of law, a
supra-legal principle, a fundamental necessity of human life itself.
Arguably then, where systems of law have to deal with commercial matters,
they must first recognise the principle; generally they do.  Both secular
and religious systems of law recognise the duty, the overriding duty, of
:honouring a promise.

Because the principle is a truism, it may be said to be morally neutral. No
judgement is made as to whether the pact is good or bad.  Society, however,
may decide that certain pacts should not exist, or that, if they are allowed
to exist, it will not support them.  Law will give effect to such matters of
social or political policy.  Thus we have, in the various jurisdictions of
the world, pacts that the state will allow to exist but will not honour or
enforce (gambling arrangements for example) pacts that can be destroyed by
the intervention of the state (voidable contracts) pacts that are not
permitted in law to exist at all (void ab initio) and the extreme category
of pacts the formation of which is, of itself, an offence against the state.
Arguably, the principle pacta sunt servanda precedes the law in these
examples, but law places limits upon the extent to which the principle is
free.  Generally, the freedom to make a promise is limited only within the
jurisdiction of the law which purports tion of the law which purports to limit it; there are, however,
aspects which some jurisdictions seek to impose more widely (USA Anti-Trust
legislation is an example) but that is a topic for another occasion.

The arbitral process is not a creation of law, although it has similarities
and, like other aspects of life, is governed by it.  Arbitration is the
creation of a promise between the disputing parties;  it is the
determination of differences between parties, by the parties themselves
:through the services of a third party or third parties whim they employ for
the purpose.

How does this argument draw comfort from the New York Convention?  The
answer to that question lies in the structure and wording of the Convention
itself.

The essence of the Convention is that the subscribing Nations agree that
their nationals will abide by an agreement to arbitrate and that those who
agree to determine their differences themselves, with the aid of a person,
or persons, or Institution of their own choice will be allowed to do so
without the intervention of a state court.  In other words, where
contracting parties have agreed to decide issues without recourse to law,
they will o law,
they will have the opportunity to do so.  A recalcitrant party is not
exempted.  That is entirely in accordance with the principle of the promise.

There are several provisions which loosely could be said to be in the
general category of "due process" requirements.  Again it is suggested that
these are not interventions of law.  All can be said to be requirements that
the parties and the arbitral tribunal comply with what commonsense requires
as part of the bargain - fairness is to be presumed.

One necessary intervention of law, for which the convention provides, comes
:into the provision that an award set aside where it is made will not be
enforced.  That is a fetter on the freedom to promise, but a necessary one,
because the Court of which exequatur is requested may not be in a position
to enquire into what has been done in another jurisdiction and the award in
question has been made a legal nullity in its own home, so to speak.  It is
conceivable, however, that there might be matters where such an intervention
was not appropriate and there have been jurisdictions in which an award in
an international matter simply would not be examined by local Court at all.
The prt at all.
The provision for awards locally set aside, therefore, is not absolute but
is a practical limitation to the freedom upon which we are reflecting in
this note.

The final intervention, the feature of the Convention without which few
states would be prepared to accept the validity of arbitration at all, is
that any state, of whose courts exequatur is sought and who may be called
upon to support the award with the power of the state, has a right to refuse
where the award is contrary to public policy.  That has been described
already as a pragmatic right of the state (although, where states are
concerned, the distinction between a right and a practical power is probably
academic).

Subject to those two limitations, which are limitations of practical
politics, the Convention seems, therefore, to be a Convention in which the
:subscribing nations agree to support a private regime of determination which
is based upon a philosophical principle rather than upon any formally
recognised system of law.  To that extent, I argue that the Convention
supports a supra-legal view of the nature of agreements between persons.
Where the agreement is between legal entities, rather than natural entities, rather than natural persons,
other matters come into play, of which the legal capacity of the legal
entity is a key example, but again, that is outwith this discussion.

What, if any, are the practical implications of this "lawless" approach to
arbitration?  As to substantive issues, there are few practical
implications.  In construing a contractual or other relationship, an
arbitral tribunal will address itself almost entirely to the legal regime
which the parties adopted for their arrangements and will decide in
accordance with that regime of substantive law (although it may be an
indeterminate regime as "according to accepted principles of law" or it may
be subjective as in "according to the justice of the matter").  In the
procedural area, however, this approach serves to remind those concerned of
the important distinction between the law and custom which govern procedure
in state courts, and may or may not be of assistance elsewhere, and the
mandatory rules, generally few in number, with which other deciders must
comply.  Because arbitration is, of its nature, distinct and separate from
the process of law, it follows that those legal practices which are not
mandatory need not b>
mandatory need not be employed in arbitration.  (Nevertheless, where legal
:practices have developed as an aid to justice, they may well be of practical
assistance outside the court system.)

A corollary to this meta-jurisprudential approach to arbitration is that
there will be some rare occasions on which the legal and arbitral analysis
of an issue may fall to be considered. Although such instances are rare and
likely to involve issues which are in some way special as to their facts,
they repay contemplation.

A case which has had some notoriety concerned a Contract which was almost
overtly a Contract for bribery to be carried out on behalf of a commercial
concern.  A Contract for pots-de-vin.  The arbitrator decided against the
Claimant who sought to be paid what he claimed to be commission in respect
of contracts which were not contemplated at the time of the agreement, which
did not produce any business.  He did so on the basis, put simply, that the
Contract was not one which could in conscience be enforced.  The reference
has been analysed and discussed at length, notably by the late Gillis Wetter
and it is not the present writer's intention to do other than use it to poseother than use it to pose
this question: is the arbitrator to be seen i) as a judge with an
international jurisdiction, with a duty to enforce an international ordre
publique, or is he or she ii) no more than a person chosen and put in place
by the parties, who must expect him or her to conduct themselves in such
matters at least according to their private conscience, or is the arbitrator
:iii) to be someone with a pragmatic eye to the practicability of enforcement
in a jurisdiction which is likely to hold the assets of a paying party and
thus unwilling to make an award which will not be enforced?  Three
fundamentally different ways of looking at the task, each leading more or
less to the same result.

It is the submission of this note that arbitration differs fundamentally
from litigation as to the basis of the arbitrator's role; that arbitration
falls to be considered solely as a contractual creation sui generis rather
than as a branch of any known legal system; and that the New York Convention
can be construed as a practical device which recognises that view of
arbitration while providing a link to the legal systems of the subscribing
nations. One might go further and perhaps open a debate by suggesting s open a debate by suggesting that
the provisions of the Convention itself are all that is required of
legislation, whether for international or, mutatis mutandis, for domestic
arbitration.

Whether this theoretical musing is of assistance in dealing with the issues
of a specific reference may be open to conjecture.  It is offered, however,
not as an alternative to conventional legal analysis but as one method of
analysing procedural questions in arbitration from a non-legal standpoint.
That, in turn, may be a step towards the consideration of how the process of
commercial arbitration may be returned to the control of the parties (who
:are, after all, our employers).

                                                    February 1996
Geoffrey M. Beresford Hartwell
 

                      +++++++++++++++++++++

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END OF THIS ISSUE.