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A Study of Mandatory Rules and Public Policy in International Commercial Arbitration
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A Study of Mandatory Rules and Public Policy in International Commercial Arbitration
 
              Mann-Long Chang*
 

Introduction

 
Party autonomy has been used in common law, civil law, and in socialist countries[1], and we can see it as a very important principle for private international law, civil law, and international commercial arbitration to adopt definitely. For example, New York Convention of 1958 has already recognized this position.[2]However, the party autonomy is not always inviolable. Sometimes, the parties should accept the binding force of mandatory rules and public policy countries involved.
Mandatory rules embody national fundamental policy. It also presents a national social economic policy[3] with the efficiency to exclude the will of the parties and the application of a foreign law. Public policy apparently reflects the fundamental economic, legal, moral, political, religious and social standards of every state or extra national community.[4]
The performance of party autonomy and that of mandatory rules and public policy always bear the increasing and decreasing relations mutually in international commercial arbitration. The more mandatory rules and public policy interfere in arbitral performance; party autonomy will be least exercised. On the contrary, party autonomy is fully respected and performed, state’s interference and control of arbitration will be weakened. But, international commercial arbitration is still unable to escape the procedure of governing from mandatory rules and public policy.
Since the different backgrounds of history, culture, politics, economic, law, custom in different countries, there are distinct definitions and applications of mandatory rules and public policy in each state,[5] thus the big argument has arisen in international commercial arbitration. Judging from above, an intense debate on the mandatory rules and public policy were going on in international commercial arbitration, it has been the subject of controversy. That is to say there is more room for further investigation. It is for this reason that it encourages me to research this topic.
 This paper focuses on studying the current theory and practice of mandatory rules and public policy by means of objective comparative analysis and synthetic induction with the various theoretical doctrines, legislations and cases. The purpose of this paper is to extend that previous point and find out the advantages and disadvantages of the theory and propose the appropriate theoretical grounds for establishing the standpoint considering both individual and national law with their public policy and mandatory rules. Questions that need to be asked are how to sustain the balance between the doctrine of party autonomy and mandatory rules and public policy and to promote development of international commercial arbitration.
 

The notion of Mandatory Rules

 
In 19th century, German scholar Savigny had proposed that no matter what national or foreign legal system, both of them ought to apply the fundamental principles of the forum.[6]But if it violates the public interests, then only the national law should be applied. This is exception to the case. Scholar Savigny also divided mandatory rules into two categories. First, the law enacted is just for protecting the personal right. For example, this law is to bind one’s capacity on the ground of his age or sex. Nevertheless, even its mandatory rules are still not able to limit the application of foreign law entirely. Thus, the second category of mandatory rules has concluded, which is not enacted for involving the personal interests at all, but established underlying the morality and public interests. For example, the marriage law is to prohibit polygamy, its mandatory rules is instituted based on the reason of morality.[7] A foreign law will be exclusively applied if it violates this mandatory rule. Though this classification is unprecedented, it is not totally appropriate to limit a foreign law, especially, regarding the issue of national economic as mandatory rules. Obviously, it is overarching the scope of mandatory rules resulting in frequent conflicts with the foreign law and not adopted. Thus, it has already received very high criticism.[8] Italian scholar Macini modified Savigny’s theory and proposed the concept of “lois d’ordre public”. He considered these rules lie in protecting the public order and have their own function to exclude the application of a foreign law.[9] Swiss law scholar C. Brocher put forth the concept of “lois d’ordre public interne” and “lois d’ordre public international” in 1876 holding that it is unexceptional to apply the autonomous national regulation in order to defend the doctrine of lex loci, even the accorded conflict of rules had indicated the applicable foreign law.[10]
For presenting the character of application of this mandatory regulation, in the modern writings concerning private international law using the distinguishing terms, such as “lois de police” “regles d’ application immediate, directly applicable rules” “peremptory norms” “imperative norms” “self-applicating rules” “absolute rules” “lois d’ order public” “overriding statutes”, and the commonly used term is “mandatory rules”.[11] Some of these terms are synonymous, and some are slightly different, however, their meaning is almost the same, and including an elementary essential of not allowing to derogate its mandatory applicability.[12]  
Some scholars consider whatever the rules of law have themselves capable to refuse the parties’ will; they are then the “mandatory rules”.[13] The meaning of mandatory rules mean that parties do not derogate them. In some cases, mandatory rules may apply instead of the proper law, and some of their provisions replace the will of the parties. Thus, M. Pryles stated: “a mandatory rules is a rule which overrides the normally applicable law (or….the proper law of the contract) whether that applicable (proper) law is ascertained by reference to an express stipulation or by reference to the closet connection. In short it is a law, which applies irrespective of or despite the proper law of a contract.”[14] To state it more clearly, mandatory rule embody a national fundamental policy, also presents a national social economic policy, including currency and exchange regulation, boycotts and blockades, embargoes, and environmental protection laws.[15] For example, the English Uniform Contract Terms Act[16] and the German Regulation of Standard Contract Terms Act,[17] those national laws are mandatory rules with the efficiency to exclude the will of the parties and the application of a foreign law.
 

The notion of public policy

 
  Public policy is a commonly recognized concept of law in private international law. Customarily, “public order” or “order public” is used for expression in civil law countries, and normally the term of “public policy ” is used in common law countries. The meaning and extent of these terms are not the same exactly. “Order public” is similar to “public policy” in that it rejects the application and recognition of foreign laws or acts, but “order public” also presents its preemptory in nature and which can not be contracted away from the domestic rules and the statutory requirement (also connotes legislative provisions which are peremptory or ius cogens, i.e. provision which cannot be out of or otherwise undercut.)[18] Furthermore, it also includes the elements of “due process” of law, whereas due process is protected by the due process clause of the Constitution, not the notion of public policy, in the United States.[19] In summary, however, the meaning of “order public” in civil law countries is more broadly than that of “public policy” in common law countries. But getting more and more civil law countries accepting the notion of order public international, the distinction of the notion of “order public” and “public policy” is becoming very slightly. In many circumstances, these two terms are changeable to be used, and their expressed meaning is the same basically.[20]
Every national scholars has attempted to make an affirmative definition of public policy for a long time, but due to public policy has its uncertainty and ambiguity, it is really difficult to affirm its definition, some scholars even regard it as “one of the most elusive and divergent notions in the world of juridical science”.[21] Though each national scholars have attempted to express the notion of public policy from every different view, till now none had been accepted consentaneously. Some scholars even think: “It is unanimously accepted in legal science that the concept of public policy is very difficult to define and that attempts to provide an all-exhaustive definition will necessarily lead to failure.”[22]
The definition of public policy is indeed very hard to define. Frequently, it varies depending on time and place. And, it varies upon the distinctive customs and habits and the concept of ethic and morality. Actually, it is very difficult to have an objective criterion.[23]
Although no definitions of public policy exist had been accepted perfectly internationally, it can be affirmed that public policy apparently reflects the fundamental economic, legal, moral, political, religious and social standards of every state or extra national community.[24]
 

The relationship between mandatory rules and public policy

 
  Mandatory rules and public policy play a very important role in international commercial arbitration, and, however, what is the difference between them and what is their interrelation? These must be clarified. In general, they are common in following points: (1) The purpose is to maintain the national significance or basic interests, principle of fundamental rules and the concepts of fairness, justice and morality. (2) To reject the recognition and enforcement of a foreign judgment and an arbitral award by excluding or restraining the application of a foreign law. (3) To reflect the concept and fundamental principle of politics, economics, society, laws, morality and religion. (4) The policy and interests of mandatory rules must comply with the aim of a national public policy.[25]
The main distinguishing feature between mandatory rules and public policy are: (1) Mandatory rule is to utilize the national law directly regulating certain matters which are absolutely necessary to apply the national law unexceptionally, for example, Article 3 of French Civil Code provides: “The laws of police and public security bind all the inhabitants of the territory ”. This provision indirectly excludes the application of a foreign law which conflicts with these mandatory rules. On the other hand, if the consequence of applying the foreign law violates the public policy in order to decide whether or not to exclude the application of foreign law. Thus, some scholars consider that mandatory rule is the first barrier to exclude the application of a foreign law, and public policy is the second barrier to exclude the application of a foreign law.[26] (2)  Constantly, mandatory rules present themselves with the definite and specific legal regulations, and public policy often presents itself with the principle of law generally and abstractly. (3) The notion of public policy is more broad than that of mandatory rules, some scholars thus hold that mandatory rules has the same meaning with the definite public policy and they are changeable to utilize.[27]
Though mandatory rules are possible to present national fundamental interests and policy, but it often reflects rather specific interests and policy, nevertheless every public policy is preemptory, but each mandatory rules are not imperative to reflect the contents of the public policy of the forum state, only the public policy can fully present the principle of public policy of the forum state.[28] In fact, it is rather hard to form clearly whether the mandatory rules presents the principle of public policy, because they are indeed superimposed, and the interpretation of the implication of public policy is changeable following the various time and objective circumstance.[29]
 

The negative and positive form of public policy

 
In the view of considering the function of public policy, generally, it may be divided into two forms, one is the negative form of public policy, and the other is the positive form of public policy. The negative form of public policy is also called “public policy reservation”.[30]  That is whenever a national court is dealing with an involved civil case, according to the conflict of law it should apply the foreign law. But the national court is available to reject to use it as the court thinks the contents of that foreign law or the consequence of applying that foreign law will violate the state’s public order. This restraint of applying the foreign law is called “Vorbehalt sklausel” by the scholar of German private international law.[31] In other words, the negative form of public policy is to view if the consequence of applying the foreign law violates the public policy in order to decide whether or not to exclude the application of foreign law. “Order public” may be considered effectively to defend the court for excluding the application of a foreign law, foreign judgment and arbitral award. The application might produce results that are inconsistent with the fundamental economic, legal, moral and political standards or principles of the forum state.[32] The judge has to support “those principles and standards which are so sacrosanct as to require maintenance at all costs and without exception”.[33]
The foremost country to legislate for regulating the public policy reservation is firstly considered France in the world, whose Civil Code states: “Private agreements must not contravene the laws which concern public order and good morals”.[34] Originally, this provision is for applying to the contract in domestic cases, but in trial practice, public police reservation system is also applicable to foreign cases. If the applied foreign law by the court violates French public order, it is then inapplicable.[35] Public policy is regarded as “fundamental moral convictions or policies of the forum”[36] the doctrine of public policy provide “a kind of barrier blocking the passage of the foreign law”.[37] Any application of a foreign law or recognition of a foreign judgment all must pass through this “barrier”. If the foreign law or the foreign judgment is “inconsistent with the fundamental public policy”[38]or “outrages (the) sense of justice and decency”[39] or “shocks the social or legal concepts”,[40] the court may reject, on this ground, the application of the foreign law and the recognition of the foreign judgment.[41]The so-called positive form of public policy is that the forum state according to its own conflict rules should apply a foreign law as its applicable law, the positive form of public policy is to analyze based on its own standpoint in the possible situation of applying the foreign law if the application of foreign law is deemed to jeopardize the national public interests, then to exclude the application of foreign law by legislation and in spite of the consequence of the substantial case applied to that foreign law.[42]
 

The role of public policy in international arbitration

 
Being a concept of traditional private international law,[43]generally, public policy is constantly invoked for defending against the enforcement of foreign laws, or against considered inconsistency with the fundamental principles of the forum’s legal system.[44] Thus, the forum is entitled the sanctity of protecting the proper value and the lowest standards of justice and morality by the public policy.[45] The application of public policy is not invariable.[46] In the field of conflict of law, public policy is regarded as a choice of law rule to be exceptionally applied narrowly.[47]But in the field of recognition and enforcement of foreign judgments, public policy is however involved broadly. Although a foreign law is not subject to control by the forum its appeal lies in the fact that, a decision made by an alien court, lacking thereof of enforcement, can be controlled.[48]
 Public policy might be rejected if forum state finds the application of a foreign law, or the enforcement of certain judgment is minimal by the reason of violating the public policy for defense.[49] Because, normally, the courts think it is appropriate to reject them by the reasoning of violating the public policy in domestic cases, but it should not be always adopted in international cases.[50] As Switzerland scholar Brocher mentioned that mandatory rules have two categories: one is order public national, for example, the regulations of adult age and marriage ability, which have the unconditional efficiency in the relationship of national civil law, but, if according to conflict of laws to single out a foreign law, the national public policy should be exclusively applied in the relations of international civil law. The other category is “ordre public international”, for example, prohibition of bigamy, ransoming the population and so on. These prohibitions have to be mandatorily applied in national or international civil cases, even the conflict of laws expresses to apply a foreign law.[51]
Ordre public policy consists of many preemptory norms, which govern private actions in forming contracts.[52] Ordre public international allows a forum to reject the enforcement of foreign laws or judgments while they violate the most basic principles of the forum, and these principles must be obeyed for maintaining the legal and social order.[53]  Apparently, the content of ordre public international is narrower than that of ordre public national and its application is limited.
The Dutch scholar P. Sanders points out that we have seen the distinction between the national and international public policy as the reasons in defense, the concept of the latter one has been bound more. According to the general theory, international public policy is only bound by violating the actual fundamental conceptions of legal order.[54] This kind classification indeed confines the scope of “public policy reservation” system and is capable to avoid any groundless application. Otherwise, once the court excludes to apply a foreign law on the ground of public policy rashly, it is rather easy to let the legal nexus involving foreign cases fall within the unstable state and affect the parties’ interests significantly. It is obvious to see, the distinction between ordre public national and ordre public international is very important in the international commercial arbitration.[55] Article 1498 of the French Nouveau Code de Procedure Civile[56]stating in French the foreign arbitral award merely “does not manifestly contradict ordre public international” will be given the effect.[57]
The earliest affirmative expression that the standard of public policy in international case is different from that of in national cases was shown in the cases of some European countries. For example, The Netherlands and France are in accordance with their own requirement of public policy requesting all arbitral awards must attach the reasons backing up those awards, or those awards would be refused to enforce. But English arbitration does not require any rendering reasons attached to the arbitral awards. While those European countries are referred by the English arbitral award whether they ought to depend on the requirements of whose public policy for refusing the enforcement of English arbitral award without attaching any reasons? Netherlands and French courts will enforce the English award on the grounds of those national public policy where it is not applicable to the cases involving international commercial arbitration.[58]
This distinction is best illustrated in the case of Fritz Scherk[59].The plaintiff purchased all rights held by the enterprise to trademarks of cosmetic goods manufactured by them from the defendant. An arbitration clause was inserted in the contract stipulating that any scandal or claim arising under the contract would be referred to arbitration before the International Chamber of Commerce in Paris, France. In Switzerland the transaction was signed off. The seller’s fraudulent representative actions concerning the trademark rights status constituted violations of Article 10(b) of the Securities Exchange Act. Article 10(b)-5 promulgated that the purchaser petitioned an action for damages and other remedy in the United States District Court for the Northern District of Illinois. The District Court dismissed the action by denying the seller’s motion.  Nevertheless, a preliminary order signaling the seller from proceeding with arbitration was granted. The District Court relied totally on the decision in a previous case known as Wilko and Swan in coming to this decision, which held that an agreement to arbitrate could not preclude a buyer or a security from seeking a judicial remedy under the Securities Act of 1933. The United States Court of Appeal for the Seventh Circuit, affirmed on the same ground notwithstanding a decision from a judge.
On certiorari, the United States Supreme Court made a reversal to the judgment made by the Court of Appeal and passed back the Case to the District Court. In Sewart J., the opinion was distinguished on various grounds and it was held that the agreement of the parties to arbitrate any matters arising out of their international commercial transactions was to be recognized, respected and enforced by the federal courts in relation to provisions of the Arbitration Act of 1925. Even though allegations surfaced that the purchaser had violated rules of the Securities Exchange Act of 1934.
Thus, the idea that arbitration clauses should be subject to less restrictive standards of enforcement than those in purely domestic situations was established for international commercial transactions. As a result, the same applied to the notion of international public policy as a concept, narrower in scope than the domestic one, must prevail in international transaction.[60]
The first similar case in America is the matter of Fotochrome,[61] it was that a USA company prior to their bankruptcy concluded an agreement with a Japanese company including an arbitration clause stipulating that any future issues arising should be submitted to arbitration for resolution, nevertheless, that clause had violated USA public policy regulating all issues arisen by the bankrupt company as prohibited from submitting to arbitration for resolution. However, all relative issues of claim are affiliated to the jurisdiction of bankruptcy court. However, the U.S. Court of Appeals decided that it should narrowly interpret the meaning of public policy and minimize its restrictions under the 1958 New York Convention, and it was only applicable subject to the arbitral award violating the forum state’s most basic notions of morality and justice.[62]
In Switzerland, the case of Firma Ligna and Baumgartner[63], it also pointed out that, although, regulation of arbitral court in a certain socialistic country requires all arbitrators to be compatriot citizens, this violates Swiss national public policy which does not prohibit the parties from making an arbitration clause according to the arbitral regulations of that socialistic country and let that state’s court proceed with the arbitration. Some cases in German court have expressed that the award involving the foreign arbitration violating German mandatory rules is not imperative constituting to violate whose public policy. It is considered contrary to the public policy only in the very extreme cases.[64]
France is the first country affirmatively to acknowledge international public policy by legislation in the world. French Code of Civil Procedure 1981 provides: “Appeal of a court decision granting recognition or enforcement is only available on the following grounds: if recognition or enforcement is contrary to international public policy.”[65] This expresses that France has recognized the distinction between national and international public policy legally and presented it statutorily, whose legislation has indeed been the guiding effect in universal historical legislation.
According to English conflict of laws “English courts will not enforce or recognize a right, power, capacity, disability or legal relationship arising under the law of a foreign country, if the enforcement or recognition of such right, power, capacity, disability or legal relationship would be inconsistent with the fundamental public policy of English law.” Generally, this rule regulates any action conflicting with the English fundamental public policy will not be enforced or recognized by English court.[66] Actually, it is very prudent to apply the public policy practically in English. In Fender and St John-Mildmay,[67] the hearing court expressed that the doctrine of public policy “should only be invoked in clear cases in which the harm to the public is substantially incontestable, and does not depend upon the idiosyncratic inferences of a few judicial minds.” It is perceived that public policy ought to be restrained appropriately, or its exceeding application will be very easy to break the stability of the legal nexus. [68] In Loucks and Standard Oil Co.,[69] the court expressed the attitude of public policy as “The courts are not free to refuse to enforce a foreign right at the pleasure of the judges, to suit the individual notion of expediency or fairness. They do not close their doors unless help would violate some fundamental principle of justice, some prevalent conception of good morals, deep-rooted tradition of the common weal.” In practice, it is quite difficult to distinguish national public policy and international public policy, because they are frequently indistinguishable.
In English, public policy is mainly invoked in two classes of case, one is that the cases involving foreign contracts, for example, the Champertous contracts[70] in Rousillon and Rousillon, the debatable contracts in restraint of trade,[71]contracts entered into under duress or coercion,[72]contracts in trading with the enemy,[73] or contracts contradicting the agreement with the friendly nations[74]. The other one is that the cases involving a foreign status, such as slavery,[75] religion or religious location,[76]alien nationality,[77]race[78].
 

Relationship Between the Forum and the Underlying Transaction

 
The notion of public policy will be applied as the forum has very strong relationships with the underlying transaction, and it has been accepted in most civil law countries.[79]
In accordance with New York Convention, several states are competent to control the foreign arbitral proceeding and the enforcement of award on the ground of public policy. The recognizing and enforcing state to be sought may apply the public policy according to the Article V(2)(b) of Convention, the country under the law of which an arbitral award was made also may rely on Article V(1)(e) to refuse recognition and enforcement of that award. But every public policy of each state is not the same at all. Some case may result in a distinctive consequence in the different countries.[80]
Thus, some scholars allege whether or not to give the arbitral award effect of enforcement that should be bound by the doctrine of Inlandsbeziehung. [81] This theory originates in Germany providing there must be a connection between the underlying transaction and the lex fori, then public policy is applicable. This notion has generally been accepted in most civil law countries,[82]and even common law countries accept this notion. Especially, the United States deems the “strength of a public policy argument must in each case be directly proportional to the intensity of the link which connects the facts of the case with this country……”.[83] It is also followed by the United States normal court to apply the public policy in the field of private international law.[84] As to how to ascertain the existing connection between the forum and the underlying transaction in the available basis for applying the public policy, there are three elements to be considered[85].
First, it is insufficient to provide evidence to the state where the place of arbitration took place. That it is fully and effectively connected with the underlying transaction by the mere fact of that forum being selected. It is a general principle of international commercial arbitration that the parties are free to choose the place of arbitration.[86] Usually, the parties chose the place of arbitration just considers its neutrality and convenience. In fact, the chosen place of arbitration has neither substantial connection with the parties nor the underlying transaction. The parties are seldom in noticing the role and the scope of the public policy of the state where the place of arbitration took place.[87]In this case, it is evidently unreasonable to refuse the recognition and enforcement of arbitral award by applying the public policy of the country where the arbitration is to take place.[88]
Second, relying on the fact that the award is made based on the law of one state only is not enough to determine by using the public policy grounds to set aside the award.[89] In other words, only relying on this fact is not able to identify the sufficient valid nexus between the forum and underlying transaction. The parties possess broad autonomy, they can freely choose the procedural and substantive rules applicable to international arbitration. The choice of parties is not based on public policy, but consider if this choice is advantageous to settle the dispute fairly and reasonably. Thus, only choosing one certain state’s law for resolving the dispute does not mean to agree utilizing that state’s public policy to determine the effect of the award. But, if the party or arbitral tribunal chooses one certain state’s law as the applicable law because of the special connection existing between that state with the parties or underlying transaction, then it is another case.[90]
Finally, if the country in which recognition and enforcement of a foreign arbitral award are sought has an important connection with the dispute, New York Convention indicates that this country has the right to apply the public policy.[91]Generally, the country in which recognition and enforcement are sought is normally the place where the major property or the business main location of the defendant; the plaintiff does not like to enforce in the forum where the defendant does not have any property. Even the country in which enforcement is sought only has very weak connection with the dispute, logically, the country of the award made will exercise its influence to ascertain if the arbitral award accords with the basic principles of its legal system.[92]
 

Relationship of public policy with other grounds

 
Public policy is constantly combined with other grounds for reaching the aim of setting aside the award. Yet some parties even allege that the arbitral award does not comply with public policy after citing other grounds for strengthening their defense. Thus, to research the relationship of public policy with other grounds for refusing recognition and enforcement of foreign arbitral awards is very important.[93]Analyses are as following:
 
1. Public policy and arbitrability of the subject matter
 
The Article V(2) of New York Convention providing two grounds for refusing the recognition and enforcement of foreign arbitral awards: (a) when “the subject matter of the difference is not capable of settlement by arbitration under the law of ”the enforcing state, and (b) when enforcement would violate public policy.[94] New York Convention deems the non-arbitrability exception in combination with the public policy exception is rather reluctant, because normally public policy has already covered non-arbitrability defense, [95]but to regard the public policy and non-arbitrability as the independent grounds to refuse the recognition and enforcement of foreign arbitral award has been adopted for a very long time. The 1927 Geneva Convention had provided these two exceptions respectively,[96] and 1958 New York Convention followed it. Some writers holding this way will not produce any bad result in practice.[97]
Under traditional opinion, the notion of arbitrability, each state according to own public policy and public profit to decide which subject-matters may be settled by arbitration and those that may not. [98] The limitation of arbitration clauses in the simple national agreement is more than that of the arbitration clauses in the international agreement.[99] An antitrust case may be regarded as non-arbitrability.[100] Therefore, the court should ascertain, what is the content of arbitrability under special national restrictions in the International Public Policy forum?
. In the cases of Scherk[101]and the Mitsubishi,[102]the US supreme court pointed out that the antitrust matter would be suitable for settlement by arbitration due to it’s involved international transaction. The US Supreme court also recognized the existence of international public policy. It also explained the arbitrability of the subject matter to be submitted independently from public policy.[103] In these two cases, the courts emphasize that the concept of national non-arbitrability cannot apply to international arbitration mechanically.[104]
 
 2 Due Process Clause and Public Policy
 
The Article V. (1). (b) of the New York Convention provides that the recognition and enforcement of foreign arbitral award can be rejected on the grounds of the following two factors, (a) when the subject matter of the difference is not capable of settlement by arbitration under the law of the enforcing state, and (b) when enforcement would violate public policy.[105]Generally, this provision is called “due process” clause, which embodies the fundamental fair procedural requirements to be respected of arbitration procedure.[106]
It is rather hard to determine if such enforcement should be recognized or rejected on the ground of “due process” for the non-arbitrability of the subject matter, but is able to be determined by public policy.[107] The aim of public policy is to protect the regulation of national procedures,[108]national courts normally decide if arbitration procedure violates or how to violate the domestic standards of justice and fairness. In fact, “case has shown that the defense of public policy is usually of limited importance, except in cases of alleged lack of due process”.[109]
  New York Convention provides that it is available to utilize the public policy ground for defense in the fields out of involvement in the “due process” clause, which expresses that the concept of public policy is wider than the contents covered by the “due process” clause. It seems the purpose of the “due process” provision of the Convention attempts to depart from the relative and flexible public policy of some basic procedural rules. The Convention also establishes the independent applicable procedural standards.[110]
The substantive application and function of public policy is different from that of “due process” provision. New York Convention V.(2).(b). provides that the court may invoke public policy exception to refuse the recognition and enforcement of award according to its own notion. But the court can apply the due process exception of Article V(1)(b) only “at the request of the party against whom it is invoked.” Public policy still has its value of application on the procedural matters out of the involvement in the due process clauses.[111]The defensive application of public policy should be limited, and only can be applied while the arbitral procedure departs from fundamental national standards of procedural protection. If the allegation of the forum and the arbitration is different in procedure only, then the public policy should not be applied.[112]
From the above analysis, it shows public policy not only can be used as an independent defense, also can combine with the other grounds for defense. Though the Convention provides ground for defense it should be based on the concept of public policy, the purpose of the Convention apparently is to establish an independent ground to refuse the arbitral award, and not to use it instead of other grounds for defense. Some scholars consider that the purpose of the Convention providing the public policy ground for defense is to avoid the Convention without enumerating the other public ground for defense in the circumstance of the other grounds not being applicable, so it provides a residual escape clause.[113]But some other scholars think that public policy, however, has existed together with the other grounds.[114]
 

Public policy of the place of arbitration

 
No matter what the considered issue is the effect of arbitration agreement, validity of arbitral award or the enforcement of arbitral award in international commercial arbitration, public policy acts as an important role,[115] because public policy is the defending reason for refusing the enforcement of the foreign arbitral award, foreign judgment and the application of a foreign law.
In general, a national court ought to consider the application of public policy in two occasions. One is that both parties have stipulated an arbitration agreement, nevertheless, one of the parties still sue and take the issue to court. In this case, the court has to determine whether the arbitration agreement is valid in order to conclude if the court has a jurisdiction on that issue. In the decision process, the court has to accord to their national public policy to concern a subject-matter whether it is capable of being settled by arbitration[116]and the issue of capability to enter into an arbitration agreement by the parties.[117] The other case is that a national court is requested to recognize and enforce a foreign arbitration award. A court must again consider the right of the parties to submit to arbitration and the ability to arbitrate on the subject matter of the dispute. Furthermore, the court must consider if the arbitral procedure and arbitral award violate the fundamental public policies of the forum prior to determining if it should be recognized and to enforce the arbitral award.[118]
However, the present writer thinks that the public policy should be still used prudently and has its own severe criterion, or its real intention will be harmed. Thus, English court is very self-restrictive to apply the public policy. English scholars Dicey and Morris indicate “The doctrine of public policy has assumed far less prominence in English conflict of laws than have corresponding doctrines in the laws of foreign countries, e.g. France and Germany.”[119] Only in the very rare occasion, a foreign law itself is regarded as violating English public policy, such as allowing prostitution or the slave system,[120] or else, the court determines underlying if the consequence of recognizing or enforcing a foreign law violates whose public policy, and does not just concern the abstract foreign law. For example, English court may regard the foreign laws admitting polygamy, incest as immorality.[121] To measure its advantage and disadvantage, it is better to recognize it than to insist on the invalidity of that marriage and illegitimate children reasoning by the public policy for avoiding disturbing the settled family relationship. Evidently, everything depends on the nature of the question, which arises.[122] Hence, till 1972, polygamously married spouses were not allowed in obtaining the divorce judgment from English court,[123] and those spouses were regarded the married persons, they were not qualified for contracting a valid marriage,[124]their children were regarded legitimately,[125]and the wife being an legal spouse was qualified to assert right of succession and other rights.[126]
Referring to the above instance, it is perceived intuitively that English court deems that “public policy is not absolute but relative”,[127]and English domestic law has founded such a principle “should only be invoked in clear cases in which the harm to the public is substantially incontestable, and does not depend upon the idiosyncratic inferences of a few judicial minds.”[128]
 

Public policy and the “Delocalisation” theory

 
  Lately, international commercial arbitration appears like a new theory attempting to detach the control from the law of the seat of arbitration. This theory hopes to establish a legal system without any control nor restraint by the law of the seat of arbitration and municipal law of the specified state.[129]In general, it is called “delocalisation” or “denationalisation”. The “delocalisation” theory of arbitration, [130] garners great challenge to the traditional “seat” theory. Some scholars even assert that enforcing jurisdiction does not inevitably come from lex loci arbitri, arbitration can be independent from any legal system, the arbitral award not following the law of the situs should have the same validity for recognition and enforcement in other nations.[131] Thus a “floating award” is produced.[132] The floating award does not belong to any system of municipal law, and international commercial arbitration itself would be “transnational”, “a-national”, “expatriate”, “supernational” or even “de-localised” award.[133]
  This theory holds that parties are free to choose procedural law and that arbitral procedure is not subject to lex loci arbitri any more, and the parties can determine any procedural law of other nations applicable to the arbitral procedure.[134] However, the opponents deem that any principle of law cannot exist in the legal vacuum, though arbitration is different from the procedure of sentence, it still cannot detach the arbitration from the law of the seat of arbitration. It is not realistic to intend escaping international commercial arbitration from the legal norm of the specified nation for not being governed by any national legal system.[135]
  Thus, scholars support this theory with regards to the parties not expecting or neutrally considering choosing the place of arbitration, not for wanting to apply the lex loci arbitri. Therefore, they advocate the legal effect and enforcement of the award does not necessarily come from the law of the seat of arbitration. The award not being made in accordance with the law of the seat of arbitration should have the equivalent legal effect and enables to obtain the recognition and enforcement in the other nations.[136]
The analysis in reality, the “de-localised ” award yet needs to face the issue of each state’s recognition and enforcement of the award, as well as whose public policy. It is quite complicated and disputative. Here is the analysis as following:
As the “de-localised ” award is an award rendered according to the procedural doctrine of parties’ full free choice of law without any direct connection with the municipal law of a particular nations. It’s a non-nationality award, whether it is applicable to New York Convention? Because the provision of the New York Convention is that “This Convention shall apply to the recognition and enforcement of arbitral awards made in the territory of a State other than the State where the recognition and enforcement of such awards are sought, and arising out of differences between persons, whether physical or legal. It shall also apply to arbitral awards not considered as domestic awards in the State where their recognition and enforcement are sought.”[137] Obviously, the interpretation section of this provision is exclusive to the “de-localised ” award. The relevance is that if the “de-localised” award is capable to sought the recognition and enforcement in the other country. However, it is worth to make the deepened study concerning the existence and development of the “de-localised ” theory.
  Every state’s scholars are debating if the “de-localised ” award is applicable to New York Convention. Some scholars object it, because they think the award rendered according to domestic law is premised for applying the New York Convention, yet the “de-localised ” award is not rendered according to the domestic law, thus it cannot be recognized and enforced in the contracting state underlying the Convention.[138] Scholar J. Paulson who supports the “de-localised ” theory thinks that in accordance with the legislative spirit, an arbitral award does not need a “nationality” for the enforcing court to recognize and enforce, actually, that award is still capable to be recognized and enforced in a contracting state.[139] However, it is necessary to make the further study for getting the deep understanding of the “de-localised” award.
 

The “De-localised” arbitral award

 
  The so-called “de-localised” arbitral award means the award is not rendered underlying the procedural rules of the arbitral situs, and any award rendered by the laws of any other state is not able to be called domestic award. In fact, the “de-localised” arbitral award is consequence of “de-localised” theory inevitably. Some international courts have rendered the “de-localised” arbitral award, it cites that this issue has been paid much attention gradually.
  A judgment in 1980 made by French Court of Appeal on Gotaverken Arendel A.B.[140] is a “de-localized” arbitral award. That case was dependent on the parties’ agreement to arbitrate in Paris underlying the ICC Rules of Arbitration. The arbitral tribunal rendered an award in appellant favor, and the defendant refused to carry out that award. Appellant then appealed for enforcing that award in Swedish. On the other hand, the defendant appealed to French court for setting aside that award he pleaded that the case was arbitrated in Paris, thus it was a French domestic award. But French Court of Appeal considered that the ICC award was not conducted relying on French arbitral procedure, thus it was not a French domestic award scope and reject to deal with that litigation because it was beyond the scope of French jurisdiction. In the circumstance of French Court not yet making the judgment, the Swedish Supreme Court held that the award was enforceable and conducted it immediately. It is necessary to point out that the result of this case was against the expectation of the parties, because the parties only selected the arbitral place “Paris” and did not choose French arbitral procedural law as its applicable law. They misunderstood the nature of the whole arbitral regulations and used the incorrect procedural law resulting in the “de-localised” arbitral award. Nevertheless, the focus of this case is that the Swedish Supreme Court clearly expressed the state of enforcement of award was powerful to determine the award being bound and enforceable, it was not even necessary to consider what the state in which the award was made would think against the effect of law of that award.[141]
  In order to escape the governing from lex loci arbitri in international commercial arbitration, the parties adopted the “delocalisation ” arbitral procedure law and make the “de-localised” arbitral award. The well-known case was the Algeria Declaration[142] signed under the mediation of Algerian Government in 1981 for resolving the crisis of USA freezing the property of Iran in whose territory caused by 52 American hostages seized by Iran. According to “the Claims Settlement Declaration”, United States and Iran agreed to establish Iran-United States Claims Tribunal in Hague, Netherlands for settling the claims of their nations against their opposite country, also for resolving any dispute caused by this hostage event.
  Iran and United States accorded to UNCITRAL Rules instead of arbitral procedural law of Netherlands, the place of arbitration, nor that of other countries to enact the Final Tribunal Rules of procedure and made volumes of arbitral award, which were all the “de-localised ” arbitral award. Furthermore, Article 5 of the Claims Settlement Declaration stipulated: “The Tribunal shall decide all cases on the basis of respect for law, applying such choice of law rules and principles of commercial and international law as the Tribunal determines to be applicable, taking into account relevant usages of the trade, contract provisions and changed circumstances.” This stipulation has deviated from Article 33 of UNCITRAL Arbitration Rules, because the Iran-United States Claims Tribunals was fully free to decide the law applicable to the arbitral procedure.[143]
 

The enforceability of “de-localised” arbitral award

 
The main reason to object the recognition and enforcement of “de-localised  arbitral award” underlying the New York Convention is because the so-called “non-domestic award” in its Article Ι.(1) is not equivalent to “de-localised arbitral award”. Moreover, the Article V. of this convention providing the arbitral award must be rendered according to the domestic law of a particular state, then it can be recognized and enforced underlying this convention.[144] But, the original aim of drafting the New York Convention was to replace the Geneva Convention of 1923 and the Geneva Convention of 1927, because these two Conventions were considered overemphasizing lex loci arbitri. Thus, enlarging the scope of recognizing and enforcing of an arbitral award becomes the main purposes of New York Convention. In terms of New York Convention, the final standpoint in the process of legislation is to widen the category of applicable arbitration. Therefore, some scholars think that Article II.(1) of this Convention is not possible to derive a conclusion exemplifying its intention on applying it to “de-localised award”, or to exclude the “denationalized award”. [145] It seems their statement is attempting to find an outlet for “de-localised award”.
Again, in the eyes of Article Ι.(1) of the New York Convention, it provides “This Convention shall apply to the recognition and enforcement of arbitral awards made in the territory of a State other than the State where the recognition and enforcement of such awards are sought. It shall also apply to arbitral awards not considered as domestic award in the State where their recognition and enforcement are sought.”           This content expresses that an award should not be governed by a national arbitration nor to be made according to a national arbitration.[146] The meaning of the mentioned “made in the territory of a state other than the states” is that it is regardless of the domestic or international character of the rules governing the proceedings,[147] and the latter part of this Article “arbitral awards not considered as domestic award in the State where their recognition and enforcement are sought.” Expounds although the awards are rendered in the State where their recognition and enforcement are sought, the state does not regard them as the “domestic awards”. For example, in French Gotaverken A.B.,[148] that award was made in accordance with the arbitral procedural law selected by the parties, and not by lex loci arbitri. That is effectively an example of a case complying with this Article. One more instance, an award in Libyan American Oil Co.[149] was enforced in the other relative countries too. Thus, while a national court of a State party deciding whether or not to enforce an award should consider if that award was made by the other contracting State, or it is a domestic award, and does not take into account which procedural law has to be applied.[150] This observation not only reflects the precedent of the court recognizing the “de-localised arbitral award”, also extends the applicable scope of New York Convention. It, however, has already considered the original purpose of legislating. And it is indeed worth approving.
Furthermore, the Article V.(1).(d) of New York Convention provides, “The composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement was not in accordance with the law of the country where the arbitration took place; or,the award will be rejected to be recognized and enforced. It is perceived that the parties have priority to choose the arbitral procedural law, and only in absence of the choice of law, the procedural law of the place where arbitration took place is applicable. In view of the present writer to contemplate logically, the free choice of arbitral procedural law by parties should not be subjected to lex loci arbitri, if their free choice of law is limited to lex loci arbitri, then there is nothing to say freely. Where the parties are unable to choose the other arbitral procedural law, it is that the provision of this Article is incorrect, or interpreted erroneously. Therefore, it concludes that a “non-domestic” award rendered underlying the scope of this convention ought to be regarded as a “de-localised  arbitral award”. And, certainly, there is no other reason refusing to recognize and enforce it on grounds of the correspondence with the requirements of New York Convention.
 

The role of public policy in “de-localised arbitral award”

 
In accordance with New York Convention, the recognition and enforcement of the award may be refused if “the recognition or enforcement of the award would be contrary to the public policy”.[151] But, on what conditions would an award be regarded contrary to public policy. Scholars popularly deem that a foreign rule itself ought not to be examined microscopically to see if it violates the basic principles of the forum law, but to see the consequence of applying the applicable law.[152] We had mentioned that public policy is in general divided into national public policy and international public policy in the fore part of this writing. This approach is acknowledged in the legal science of most countries.[153] However, some countries still do not support this distinction, e.g., Brazil and the countries of the Middle East.[154] But some scholars think though “international public policy” is named with “international”, it is practically not well worthy of its name, because this public policy is still domestic in nature. In practice, international public policy with national public policy are two distinctive forms of domestic public policy of a particular state for bringing forward their own function in the different area respectively. Both reflect the conception of value of a particular state.[155]
Thus, the well-known English scholar C.M. Schmitthoff stated “international public policy should be understood as forming part of the concept of national policy”,[156] but the notion of national public policy is more broad than that of international public policy. To have the mandatory principle or conception in private international law is preemptory in national relations generally. But to have the mandatory principle or conception in national relations does not mean to be mandatory in international relations certainly.[157]
  One concept of the values common of public policy exists in international society popularly. It is constituted with the fundamental rules of natural law, the principles of “universal justice”, ius cogens in public international law and the general principles of morality and public policy accepted by civilized countries.[158] Some scholars call it “transnational public policy” or “truly international public policy”. The character of this policy may be regarded “calling upon States to cooperate in the protection of shared values by not giving legal effect to transactions contrary therts.[159] The conception of international and transnational public policies is distinctive. The purpose of the former one is to protect the fundamental principles of the forum state. And, the latter one is to concern the values common of international community. The effect of the former is to refuse the foreign rules probably resulting in harmful effect to the fundamental policy and interests in the forum state. And, the latter one, strictly to speak, is without any connection with the foreign forum law, but, focuses on refusing the rules or trading practice that run contrary to the principles and policies accepted by civilized states.[160]
  The uncertain definition of public policy leads many parties would like to put forth dissent, or take objection against enforcement by citing public policy, but the possibility of success is small. In ICC arbitral cases, some 140 precedents had invoked public policy to defend, but only 5 of them had been adopted. It approves that the court makes efforts to lessen the application scope of public policy and supports the recognition and enforcement of foreign arbitral award to the utmost.[161] More and more countries have adopted the theory distinguishing national and international public policies. The commonly accepted view is that the public policy on grounds of narrow nationalism is not appropriate to apply to the international cases, and the acceptable international public policy is subject to violating the basic concept of the relative national legal order.[162]
 In the United States, courts usually put forward the arbitration clause or arbitral awards that violate US legal laws, and seldom apply public policy for denying the effect of enforcement, even the parties claim the consequence of enforcing the awards would jeopardize national security, the courts would still not accept their defense, only the parties put forward sufficient evidence to defraud and coerce, thus the courts would apply public policy for rejecting the recognition and enforcement of awards”.[163]
To see each state’s precedents underlying the New York Convention, the applied ratio of public policy by contracting state is still a few. Only a few awards were refused as the consequence of recognizing and enforcing them would jeopardize whose national public order. Indeed, public policy is very important for every country, and no other nation is willing to waive it. But in practice, international commercial arbitration, the normal countries also do not use it indiscreetly. As English Judge Mustill states, it has never been found in English court that it is necessary to interfere if arbitral proceedings comply with the public policy rules.[164] Although this narration is overstated, it reflects that judges do not regard citing public policy very much, or, at least they are very cautious to cite it.
Actually, “de-localised” arbitral award has not yet got the popular acknowledgement by each state for the time being. Thus, if the parties want to select “delocalisation” arbitration, they do need to run the risk of the award being refused to be recognized or enforced in the relative country possible. To view it at the point of procedure, such an award should be recognized as a “nondomestic award” falling within the extent of New York Convention, thus, the further application of this Convention is possible. Once such an award is acknowledged applicably to New York Convention, then further examination may be made if “the recognition or enforcement of the award would be contrary to the public policy of that country”[165].Owing to the insufficient legal grounds of “delocalization” award, the present writer advocates that every state ought to enact an international convention stipulating the proper and complete regulations for “delocalization” arbitration, thus such an award would have the full legal basis[166] for assuring its recognition and enforcement in a Contracting State. 1965 Washington Convention had provided some legal bases of “delocalisation” award for each state and other than nations, it provides:
“The award shall be binding on the parties and shall not be subject to any appeal or to any other remedy except those provided for in this Convention. Each party shall abide by and comply with the terms of the award except to the extent that enforcement shall have been stayed pursuant to the relevant provisions of this Convention.”
  “Each Contracting State shall recognize an award rendered pursuant to this Convention as binding and enforce the pecuniary obligations imposed by that award within its territories as if it were a final judgment of a court in that state. A Contracting State with a federal constitution may enforce such an award in or through its federal courts and may provide that such courts shall treat the award as if it were a final judgment of the courts of a constituent state.”[167]
It implicated that each Contracting States had accepted ICSID award and had no right to examine the arbitral proceeding, nor to take objection to the award. It indeed was creating and developing an arbitral history. Though at that time Italian Professor Monaco did not agree with this observation, most of the other scholars did not have the same opinion.[168]
 

United States Courts and Public Policy

 
The first case invoking the public policy exception of New York Convention by United States court was the Parsons and Whitemore Overseas Co.[169] That was a paperboard mill construction project in Egypt contracted by USA companies Parsons
and Overseas with the Egyptian company RAKTA. An arbitral agreement also included in that contract providing that if any disputes arose, they must be submitted to arbitral tribunal for settlement. The 1967 Six-Day War in the Middle East just occurred at that time. [170] The Agency of International Development (AID), an agency of the State Department withdrew their project of financial investment after the relations of United States with Egypt had deteriorated, and the majority overseas workers including Parsons and Whitemore Overseas Co. moved back from Egypt.[171]Thereby, RAKTA accused Overseas of breaking the contract and submitted to arbitrate according to the agreed arbitral agreement. The arbitral award was in favour of RAKTA,[172] and RAKTA applied the enforcement of that award in the United States. Overseas defended against that enforcement relying on the Article V.(2).(b) of New York Convention and argued that the company had been ordered to cease performance by the United States government, the arbitral award violates the public policy of the United States.[173]
But that court denied the defenses of Overseas, because they thought the enforcement of foreign arbitral awards should be denied on public policy grounds “only where enforcement would violate most of the forum state’s notions of morality and justice”.[174] The court also stated that Overseas had erroneously equated “national” policy with “public” policy and asserted that “to read the public policy defense as a parochial device protective of national political interests would seriously undermine the Convention’s utility” and would have converted “a defense intended to be of narrow scope into a major loophole in the Convention’s mechanism for enforcement”.[175] Obviously, Parsons case is the leading U.S. case applying the public policy of New York Convention for defense. Its principle it is best to narrow the interpretation of public policy for avoiding its abuse.[176]
In McDonnell Douglas Corp. v. Kingdom of Denmark,[177]Denmark tried to claim a recover damages caused by the launching of a missile carelessly.[178] In accordance with an arbitration clause in its sales contract, Denmark submitted to arbitrate, McDonnell Douglas attempted to exempt from their obligation and defended that it violated the United States public policy if submitted to arbitrate, many documents should be provided for defense and those documents were confidential, which should not be and could not be submitted to arbitrate.[179]This defense was not accepted by the domestic court, and the court even emphasized that McDonnell Douglas had already acknowledged the nature of the limitation and the confidential requirements of USA national security while they contracted with Denmark, then agreed to that arbitral clause.[180]The court also alleged that the arbitrators were in no need to judge on matter of national security.[181]
 

Public Policy of the enforcing Courts

 
According to Article II(3) of New York Convention stats:
“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.”
 It indicates if either of the parties sue the court in the circumstance of an arbitral agreement existing between the parties, the court is imperative to review the effect of that agreement based on the national law including the public policy. The court possesses the right to declare an arbitral agreement void if it violates the national public policy, and is competent to conduct its jurisdiction over that issue. It means it is not only the court of enforcing state is able to invoke the public policy for defense, the relative contracting states of arbitral agreement also enables the application of public policy underlying the legal system of New York Convention.[182]
Though the relative contracting states can apply the public policy for defense underlying the legal system of New York Convention, the national court cannot exercise its right without any reservation or unlimitedly. This consequence can be seen from the continuous legislative history. The article of 1(2)(e) of 1927 Geneva Convention Provides that an award will be enforced if “the recognition or enforcement of the award is not contrary to the public policy or to the principles of the law of the country in which it is sought to be relied upon”.[183] This is apparently different from Article V.(2)(b) of 1958 New York Convention providing “recognition and enforcement of an arbitral award may also be refused, if the competent authority in the country where recognition and enforcement is sought finds that:……the award would be contrary to the public policy of that country”.[184] As Geneva Convention use “public policy or the principles of the law of the country”, the New York Convention uses only “public policy”. The scope of application of Geneva Convention is wider. And the scope of application of “public policy ” is different from that of “the principles of the law of the country”. However, 1958 New York Convention had already waived the contents of “the principles of the law of the country”. Evidently, the narrow interpretation of public policy exception concerning its available application is subject to violating the public policy directly and it is not applicable by merely involving the conception of public policy.[185]
Article V.(1).(e) of New York Convention Provides: “The award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made”, recognition and enforcement of the award may be refused, at the request of the party against whom it is invoked. Upon that award was set aside, the other Contracting States are also capable to refuse it by underlying the same reason. It is perceived that the public policy of the state in which the award was made has a certain effect on the arbitral award. If the parties concern are only the law of the enforcing courts, they ignore the public policy of the country where the award was made.It would be unrealistic. Pursuant to Article V. of New York Convention, an award should comply with both public policies of the state in which the award was made and the state in which the award was enforced in principle, thus the Contracting State will recognize and enforce it accordingly.
  The common law countries argue that the application of public policy should be limited more than that of national and domestic laws in private international law.[186] In United States, for example, the courts have distinguished the international public policy from domestic public policy while dealing with the enforcement of arbitral clause of international transactions.[187]
Clearly, the enforcing measure of arbitral clause in international transaction has the lesser limitation than that of the simple domestic transaction. In other words, the scope of the notion of international public policy is narrower than that of the domestic public policy and has the priority.[188]
The case of Mitsubishi Motors Corp.[189]evidenced the limited application of public policy. The superior court indicated that the antitrust argument produced by the international transaction may be submitted to arbitrate. Antitrust transaction is an international issue, which should not be to be waived by arbitration.[190]
 

Mandatory rules of the lex loci arbitri

 
  The legal system of each nation has own laws or rules applicable to procedure. Some are mandatory and some are not.[191]If the arbitral procedure by parties’ agreement violate any mandatory rules of lex loci arbitri, thus, the mandatory rules of the place where arbitration took place should be abided, unless the parties accord to the lex loci arbitri to exclude or modify the mandatory requirements underlying the agreement.For example, according to Article 7.(6) of ICC Rules providing “insofar as the parties have not provided otherwise, the Arbitral Tribunal shall be constituted in accordance with the provisions of Article 8.9 and 10”, the parties entrust a person of the third country as an arbitrator and stipulate that arbitration will take place in any party’s state. But the law of the state where the arbitration will take place has one rule prohibiting the foreigner as the arbitrator, whereas this mandatory rule is able to exclude the agreement of appointing a foreigner as an arbitrator except that the state allows the parties to contract.[192] Otherwise, one of the parties may claim to set aside
the award on grounds of the party not abiding by the mandatory rule of lex loci arbitri. Thus, that award may be set aside .[193]
Although according to party autonomy, which grants the parties’ arbitration to conduct their arbitral proceedings, to fit their particular requirements with considering the law governing arbitral procedure, this principle freely grants the parties the power, which can freely select favorable procedural rules.[194]However, the doctrine of party autonomy is not always holy and inviolable. Sometimes, the parties should accept the binding of mandatory rules of the place where the arbitration took place. For example, English Arbitration Act regulates as following “The tribunal shall (a) act fairly and impartially as between the parties, giving each party a reasonable opportunity of putting this case and dealing with that of his opponent, and (b) adopt procedures suitable to the circumstance of the particular case, avoiding unnecessary delay or expense, so as to provide a fair means for the resolution of the matters falling to be determined”, “The tribunal shall comply with that general duty in conducting the arbitral proceedings, in its decisions on matters of procedure and evidence and in the exercise of all other powers conferred on it”.[195]Lord Fraser of Garmyelie for the government said in the House of Lords: “Clause 33 provides a check and a balance on the powers of the arbitrators set out elsewhere in the Bill Arbitration must have their obligations under clause at the forefront of their minds throughout the arbitration”.[196]Still another “An award made by the tribunal pursuant to an arbitration agreement may, by leave of the court, be enforced in the same manner as a judgment or order of the court to the same effect”, “Where leave is so given, judgment may be entered in terms of the award”, “Leave to enforce an award shall not be given where, or to the extent that, the person against whom it is sought to be enforced shows that the tribunal lacked substantive jurisdiction to make the award”.[197]These rules are all mandatory. If parties’ agreement is contrary to these rules, then the agreement is null and void.
Apparently, the rules embody some fundamental policies of a nation and acknowledges “interest of the State is too important for them to be in competition with foreign laws”,[198]they also normalize “the will of the parties”.[199] Mandatory rules even embody the vital socioeconomic policies of the State involved, these include the laws of loan, foreign exchange control, boycott, blockade, embargoes and environmental protection,[200]such as English Employment Protection (Consolidation) Act, the English Uniform Contract Terms Act.[201]
Usually, mandatory rules of the lex loci arbitri are regarded equivalent to that of the relative legal system, but lex contractus is the exception. Nevertheless, the lex loci arbitri does not coincide with the governing law.[202] In other words, the applicability of mandatory rules of the law of the place of arbitration is determined by the extent of the connection between the situation and the rule in question, not only the fact that mandatory rules is the part of lex loci arbitri.[203]
 

Mandatory rules of the third states

 
The manner of the international commercial arbitrator on foreign mandatory rules is still in argument in arbitral doctrine and practice at present. Some take a hostile attitude towards the application of such rules and some others agree.[204]In general, it seems the arbitrators are hardly to be granted without regard of public interests protected by the judges, because if arbitrators always ignore the foreign mandatory rules, the arbitration of disputes would then be in question. Moreover, if the issue of mandatory rules is involved in every arbitral proceeding, it undoubtedly would, suspend the proceeding, and will lead the parties to invoke court action instead of arbitration for settlement. The successful result of will cause “the efficiency of the arbitration system would generally be put in jeopardy”.[205]
Nowadays, international commercial arbitration has already accepted the applicability of mandatory rules of the place of the award popular for granting the efficiency of the award. The arbitrators have no choice but to apply those rules.[206] In the eyes of every state’s main arbitration convention, national laws and some arbitration rules, it can be inferred that arbitrators have derived this obligation from them.[207] Nevertheless, the performance of the mandatory rules of the place of the award’s enforcement is not without any difficulty. It is that the arbitrator might not know where the award will be enforced while he is making the award, thus, he did not know the mandatory rules of the state of enforcement. Next, the concerned effectiveness of the award by the arbitrator may not be the basis for determining the applicability. If the arbitrator predicts the place of enforcement, he has to know who is the winning party beforehand and it is subject to the application or rejection of the mandatory rules. To explicate, whether or not the arbitrator apply the mandatory rules can decide the success or failure of the parties. If it is, it will cause a vicious circle[208] and if the award will be enforced in several countries, there are still conflicting policies on the back of mandatory rules.[209]
The application of mandatory rules identifies the closely connected nature of relationship between the foreign mandatory rules with the dispute and is compulsory even when the rules are not a part of governing law. This approach acknowledges that the parties’ will coincide with the state’s interests closely binding with the dispute. It also manifests the possibility of applying the foreign mandatory rules practically. However, some well-known international conventions have accepted it and performed it in dealing with the contractual relations. For example, Article 7.(1) of European Convention on the Law Aapplicable to Contractual Obligation[210] provides: “When applying under this Convention the law of a country, effect may be given to the mandatory rules of the law of another country with which the situation has a close connection, if and is so far as, under the law of the latter country, those rules must be applied whatever the law applicable to the contract. In considering whether to give effect to these mandatory rules, regard shall be had to their nature and purpose and to the consequences of their application or non-application.” It expresses the collaboration of international solidarity. Each state should assist mutually concerning the enforcement of the relative administrative policies. The arbitrators ought to take this solidarity by giving the effect to the mandatory rules. It is that the arbitrator has to give the fair and reasonable effect to the enacting state’s rules binding with the contract closely.[211]
A similar approach is also adopted in the Hague Convention on the Law Applicable to Agency. “In the Application of this Convention effect may be given to the mandatory rules of any State to which the situation has significant connection, if and is so far as, under the law of that State, those rules must be applied whatever the law specified by its choice of law rules”.[212] These provisions are certainly not applied to the arbitral proceeding directly, but they also present the appropriate respect not only to the proper law, also to any relative laws to reconciliation.
 

Mandatory rules affect courts

 
  Based on national law, the domestic courts have the obligation to apply their own mandatory rules and public policy. The jurisdiction and other obligations of the court are derived from the state’s judicial sovereignty and founded by underlying the national legal system. The court has the responsibility to protect the basic value. Act criteria and legal order of the nation not being violated. On account of the national policy and interests, a national court not only has the right allowing to apply a foreign law or recognize and enforce foreign judgment or arbitral award. It also has the right to reject the application of a foreign law as well as the enforcement of the foreign judgment and arbitral award under the consideration of public policy.[213] But the court is not able to let the judges do as they please to refuse the foreign right in order to adapt the personal convenience and advocate fairness, also, the court cannot close the door without extending its assistance. Except that this assistance is contrary to some fundamental principles of justice, some prevalent conception of good moral and some deep-rooted tradition.[214] In general, there are two situations that the national court needs to take account of the application of mandatory rules and public policy in international commercial arbitration. One situation is that an agreement to submit to arbitration has been made by parties, yet one of the parties put forward the lawsuit to the court. In this case, the court has to determine the validity of the arbitration agreement for asserting whether or not they have the jurisdiction. Thus, the court ought to consider if the national mandatory rules and public policy negating the arbitrability of the subject-matter of the dispute and the right of the parties to submit to arbitration. Besides, in the circumstance of the court being requested to recognize and enforce a foreign award, the court need not only to examine the arbitrability of the subject-matter of the dispute and the right of the parties to submit to arbitration, also to consider if the arbitral procedure and award violating the fundamental public policies of the forum.[215] In addition, the court of the state where the arbitration took place has the right of supervision and examination on the award made in those territory based on whose law. If the party takes objection to that award and appeal to the court for setting aside that arbitral award, the court needs to consider the applicability of mandatory rules and public policy too.[216]
 

Mandatory rules affect arbitrator

 
International arbitral tribunal is not a national body. It does not constitute the law of the country where the arbitration took place, nor perform its duty relying on the law of the country where the arbitration took place. In fact, international commercial arbitration is an agreement arranged by the parties for settling the dispute.[217] International arbitrators need not be faithful to any sovereign state, nor to have the obligation to apply mandatory rules. International arbitral tribunal other than the national court does not have the commonly meaning “forum” and “lex fori”. Theoretically, even an arbitral procedure, takes place in a particular country, the international arbitrator has no obligation to apply and respect to that country’s mandatory rules.[218] It can say, international arbitral tribunal and arbitrator do not naturally attribute to a state’s legal order, the arbitrator other than the judge need not abide “lex fori”. The arbitrator cannot obtain the support from the conflict of laws of the state where arbitration took place, the arbitral proceeding is unable to get the protection from lex fori.[219] However, it does not mean the arbitrator can completely disregard the mandatory rules of the relevant national law, or there is no room for mandatory rules applicable to the international commercial arbitration. In practice, the parties submit the dispute to arbitration instead of court expecting the arbitrator to make a fair and speedy award with effective enforcement. On this point, the arbitrator ought to respect and realize the parties’ reasonable expectation, otherwise it is meaningless to arbitrate. Thus, the arbitrator must do his best to avoid damaging the factors of the effect of the award in arbitration proceeding.[220]
To prevent the award from being set aside by the courts of the state where the arbitration took place, the arbitrator has to take into account the application of mandatory rules of that state.[221]On the other hand, the international commercial arbitrators are the guardians of the international order,[222] “they must protect the rights of participants in international trade; give effect to the parties’ respective obligations under the contracts; imply the presence of commercial bona fides in every transaction; respect the customs followed in international trade practice and the rules developed in relevant international treaties”.[223] To maintain the policy which is the idea commonly accepted in international commercial society and popularly adopted by the international organizations, and to promote the fundamental moral and ethical values followed by the commercial activities,[224]the arbitrators have to respect party autonomy as their rights are derived from the parties, they also have to protect the basic conception and principle of international commercial society to become the guardians of international commercial order. In addition, a state allows the party to  choose to arbitrate exclusively the jurisdiction of the court, the main consideration is that the state assures even the dispute being submitted to arbitrate, whose mandatory rules will still be respected by the arbitral tribunal. Or, the state certainly does not allow the parties to submit the dispute to arbitrate. Thus, the arbitrator should guarantee that arbitration is not implemented to evade the state’s fundamental public policy, or else the reputation of arbitration will be harmed.[225] Actually, this issue is still in debate. Some scholars advocate that the arbitrator is able to disregard the public policy of any country,[226]but some uphold “the arbitrator must therefore pay special attention to the public policy of the country where enforcement of the awards is likely to be requested”.[227] “The arbitrator should also consider whether the contract has such a connection with the economy of the enacting country that it would be fair and reasonable to give effect to the mandatory rule in question”.[228]Nevertheless, the present writer deem the relation between the arbitrator and mandatory rules be studied further.
 

Whether the arbitrator has the obligations to apply mandatory rules?

 
Traditionally, it emphasizes on the doctrine of party autonomy, arbitrator’s right deriving from the parties and the obligation of arbitrator abide the party’s choice of law in international commercial arbitration, hence, the arbitrator ought to reject the application of foreign public law definitely.[229] Scholar Anton Heini[230]advocate “ that the ordre public of a law other than the lex contractus does not have to be respected if the parties have not chosen a certain law in fraudem legis; an arbitrator is even less obliged to give consideration to economic policy rules of a State Whose law was not chosen by the parties”.[231] Besides, Scholar E. Gaillard who also holds that an arbitrator is less obliged to consider the mandatory rules of the forum, and even less to respect policy rules of a state, the law of which has not been chosen by the parties. However, the arbitrator regards mandatory rules as a reality to consider at most.[232] For example, in ICC Award 6379/1990,[233] the sole arbitrator sitting in Paris rejected to give effect to the first cited mandatory Belgium rules on exclusive distributorship agreement on the grounds of foreign mandatory rules not forming a part of the governing law. In this case, the focus is that the defendant cited the Article of Rome Convention to support his defense, yet the arbitrator still rejected his appeal, because the arbitrator deemed foreign mandatory rules is innately inapplicable. Moreover, in ICC 1399/1966,[234]the arbitrator thought the contract was contrary to the “Lois de policy of the place of importation” on the ground of which does not form a part of governing law.[235]
These traditional views have been criticized by many scholars because they overemphasize respect for the party's wishes and neglects the interests of the state on particular issues. Therefore, the scholars uphold that the arbitrator even has the obligation to apply the mandatory rules of other relevant legal systems in the particular cases and ought to seek a balance between the doctrine of party autonomy and the application of mandatory rules.[236] Scholars Y. Derains deems if the parties have chosen the mandatory rules other than the law, and which are rejected by the arbitrator on the ground of those rules not falling within the available laws to be selected by parties, it is not persuasive. The arbitrator ought to explicate why there is no other reason to apply those rules. The clause of the choice of law in parties’ agreement is not imperative excluding the application of the mandatory rules of the other legal systems. If the parties express to exclude the application of mandatory rules of the other legal systems clearly, the arbitrator then should respect the will accordingly. If it is simply parties attempting to evade mandatory rules, then it violates “truly international public policy” and to be rejected in application.[237] But, scholar P. Mayor considers, if mandatory rules are inclusive in the law governing the contract, or the parties are in absence of the expression to exclude their application, or one of the parties advocate to apply them, the arbitrator can consider to apply them. In other words, in some circumstances, the arbitrator has the right to consider rules and regulations of a specific state or the extra-national community other than the law chosen by the parties.[238]
The arbitrator has to consider the mandatory rules of the state, which realistically governs the contract. Usually, it is the law of the place where the contract is performed. Actually, it is immoral and unreal to compel the party to perform an illegal contract according to the law of the place of performance.[239]
 

Which mandatory rules of law should arbitrators apply ?

 
  The scholars who agree that the arbitrator applying mandatory rules other than the legal systems are considering, which mandatory rules of the specific legal system should be applied by the arbitrator, but they still have a different opinion. This paper is trying to refer to the views of scholars, regulations of law and the precedents of judicatory for evaluation.
  To assure the arbitrator affirming mandatory rules of other legal systems, the scholars have proposed two methods. One is the functional analysis to estimate the applicability of foreign mandatory rules. According to this method, while the arbitrator determines the application of mandatory rules other than lex contractus, “regard shall be had to their nature and purpose and to the consequence of their application or non-application”. This method is embodied in Article 7.1 of the 1980 Rome Convention on the Law Applicable to Contractual Obligation. This analysis results in the application of the law of the place of performance. The party depends on the law of the place of performance to carry out the contract.The arbitrator is not able to apply any illegal law, which is not allowed by the mandatory rules of the place of performance.[240]1980 Rome Convention on the Law Applicable to Contractual Obligation was to adopt this method.
For example, the United States issued U.S. antitrust laws considered as arbitrable in international commercial arguments since the 1985 Supreme Court ruling in Mitsubishi and Soler[241].The Court held that, agreement of parties’ to arbitrate under Swiss law not withstanding that U.S. law must be applied to the antitrust claims:
“Where the parties have agreed that the arbitral body is to decide a defined set of claims which includes, as in these cases, those arising from the application of American antitrust law, the tribunal therefore should be bound to decide that dispute in accord with the national law giving rise to the claim.”[242]
This assessment makes it clear that the Court linked its decision to the expectation that the arbitration tribunal would, in spite of the choice of Swiss law, apply U.S. law as mandatory foreign law. It was proof that the Sherman Act was applicable to Soler, which was an American distributor, carrying out its activity on a part of United States territory. According to the Supreme Court, the applicable law has to be deduced from the facts of a case; each State has the exclusive right, under public international law, to prohibit or allow the import of goods in its own territory. Therefore, if a contract involves the import of goods into a certain country, it is obvious that the administrative law of this country applies.[243]
  The next one is a method most closely connected, some scholars state that while the arbitrator considers the application of the other mandatory rules, he should measure the connection of those rules with the dispute. The purpose is to affirm the connection between the transaction of the parties with the mandatory rules of the enacting state; next, the arbitrator has to examine the implicit or explicit policy in those mandatory rules if they express that those rules are applicable to international commercial transactions[244]Swiss Private International Law Act (PIL). Article 19 (Talking into Account Mandatory Provisions of a Foreign Law) says:
“(1) A provisions of a law other than the one designated by this statute that is meant to be applied mandatory may be taken into account if interests of a party that are according to Swiss views, legitimate and clearly overriding so require and the case is closely connected to that law.
(2) Whether such a provision should be taken into account depends on its policy and its consequences for a judgment that is fair according to Swiss views.”
Evidently, this Article takes into account both methods; it requires the very close connection of the dispute with the law including the mandatory rules, also needs to examine the purpose and consequence of the application. The arbitrator has adopted this method to reject the application of the mandatory rules of the relative state in arbitration practice.[245]In a 1982 award of the Amsterdam Grain Trade Association,[246]the arbitral tribunal noted that the applicability of foreign mandatory rules is depending on the “nature and extent” and the “consequence of its application or non application.” It is short of legal and substantial contact with the agreement in addition to the nationality of one of the parties. In this case, the relevant connecting factors point out Netherlands and Germany. However, the Austrian nationality of the party is still not the legitimate reason fully. In ICC case No.6379/1990[247], it was of a sole arbitrator, where it was taken into account the purpose and scope of mandatory rules, as well as the aim of the application. Both parties are Italian and Belgium, and Italian law was the governing law. The arbitrator rejected the application of Belgium mandatory rules, because it “does not aim at binding the international arbitrator”.[248] The arbitrator found that court was designed for the application of Belgium courts entirely.
Referring to the practical arbitral cases, we can see that the foreign mandatory rules were applied to the appropriate cases only. In private cases, these rules will be applied relying on their connection with the dispute as well as their nature and purpose.[249]Some scholars even deem that to judge whether or not the mandatory rules of a particular law system are applicable with close connecting factors and the fact of the subject-matter dispute with the applicable mandatory rules in question are the decisive elements.[250]
 

Conclusion

 
  It has been accepted internationally that in accordance with the doctrine of party autonomy, the parties are free to choose the law applicable to procedure.[251]The trend of free choice of law has been carried out by legislation. It enables to satisfy the parties’ expectation certainly and is advantageous to the development in international commercial arbitration. However, the present writer advocates that the party’s free choice of law does not have the proper binding, the party will be easy to reach the aim of evading the relevant states’ mandatory rules and public policy by means of the free choice of law. This consequence will not please the scholars who advocate the principle of party autonomy, and is not the original intention of every state’s legislation and practical judgment, because it will be rather easy to cause the unreasonable application of the law and to harm the legal rational concept of fairness and justice. Thus, every state has legislated some procedural rules to be abided by parties with the arbitral tribunal without being derogated for granting that the arbitral procedure at least can be carried out fairly and enables to reach the aim of the policy to settle the dispute effectively. These mandatory rules indeed restrain the applicable scope of the party autonomy. For example, the lowest standard of “due process” designed by the laws of the arbitral seat regulates that the party is not capable to revise or exclude it by agreement[252] and the arbitral tribunal cannot either disregard or take regard. To view this standpoint, the party autonomy is worthy of adoption and promotion, but it is not sacrosanct and unbound.
The point is how to bind properly. It will harm the development of international commercial arbitration if there is too many bindings. On the other hand, it cannot carry out the realization of the fairness and applicability of the law only through few bindings. Though every state’s scholars, precedents and legislation have expressed their own opinions, each national conditions are different, also the considering factors are distinctive. Certainly, the judgment is not hard unanimous due to reasons upheld. It is comprehensible that the views of the scholars and the legislation of each country are various in this pluralized international society.
The common law countries oppose applying the mandatory rules of non lex fori, nor the governing law of the contract. For example, a United Kingdom statute does not normally apply to a contract unless the governing law of the contract is in English [253] or it is procedural in nature.[254]Australian statute is similar to English,[255]but is different in Canada.[256]The United States is broader to deal with the foreign mandatory rules. In American restatement of Conflict of Law, mandatory rules of the other countries are allowed to apply . If “which has a materially greater interest than the chosen State in the determination of the particular issue” and in accordance with the forum’s law, the parties are in absence of expressing the choice of law, then the mandatory rules of such a state is applicable.[257]The civil law countries incline to apply the mandatory rules of the other legal systems in the particular issues. Swiss Federal Supreme Court relying on Article 19 of the Swiss Private International Law Act has expressed that the arbitrators are not necessary to be bound to the law chosen by the parties and are allowed to take into account the other laws,[258]the law of Netherlands has acknowledged that the parties are able to choose the mandatory rules of the other nations for application too,[259]
 Referring to Article V.(1).(e) of New York Convention, the award has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made. Apparently, “a competent authority of the country” and “the state in which the award was made” is capable to set aside the award if which violates the mandatory rules or public policy. On the other hand, the state of enforcement of award has the power to determine if the award is enforceable, and can consider or disregard the viewpoint of the state in which the award was made on the legal efficiency of the award. But, for arbitrators, it seems they cannot disregard the mandatory rules of those states for avoiding the effect of the validity of the award in future.
As to the “de-localised award”, which is made according to the procedural rule of free choice of law by parties, there is no direct connection with the municipal law of a particular country, it is a non-nationality award. Such an award applicable to New York Convention is still in argument by each state’s scholars. For the purpose of legislation to broaden the extent of the application of New York Convention, the status of “de-localised award” should be recognized. To infer it logically, contracting state should accord to the contents of New York Convention to determine whether or not to give the recognition and enforcement of each respective “de-localised award”. After all, it is just a standpoint of the theoretical study, and no absolute binding to the contracting state. In other words, it is unable to grant that such an award would be recognized and enforced. Thus, the present writer considers taking Washington Convention as a model to enact an international convention by every state ruling a clear norm for the status of “de-localised award” and stipulating that each contracting state has the obligation to recognize and enforce such an award affirmatively, in addition, to regulate the performance of the involved mandatory rules and public policy for avoiding any argument.
The conception of public policy is not very clear, therefore, it is quite hard to define its notion. But it reflects a national or an extra-national community’s economic, legal, moral, political, religious and social standards. The nation and extra-national community will protect these principles and standards at all costs.[260]Furthermore, public policy is an implement for balancing the party autonomy with the governing of a national legal, it constitutes the normative criteria of the social structure and legal foundation of a particular state.[261] In this circumstance, the domestic court is asked for recognition and enforcement of a foreign award, the court must examine if arbitral procedure and arbitral award violating the fundamental policy of the place of court in order to determine whether or not to recognize and enforce such an award.[262] In the meantime, the courts of the country where the arbitration took place underlying their national legal have the power to supervise and examine the arbitral awards. If the party takes objection to the award and appeals to the court for setting aside that award, the court has to take into account the application of the mandatory rules and public policy.[263]
  Evidently, the view that the arbitrators can disregard the national public policy[264] is not realistic. Though there is no rule popularly accepted to guide the arbitrators to apply the relevant state’s mandatory rules and public policy, normally, it is deemed that the following principles will affect the arbitrators. (1) “In general, international arbitrators are found to apply the rules of public of the law governing the arbitration”[265](2) “the public policy of the place where the arbitration takes place should be taken into account only for the limited purposes of procedural matters”[266] (3) “the public policy of the enforcing countries is frequently a necessary consideration for international arbitrators”[267] In short, the arbitrators ought to apply the mandatory rules and public policy of the state of enforcement of award and the country in connection with the dispute for making the effective award and carrying out the parties’ expectation and wishes.
  It does not mean that public policy can be broadly used. Contrarily, it needs to limit its utilization to the utmost. This is an example that the 1958 New York Convention did not use “to the principles of the law” its purpose is to interpret public policy narrowly. The application of public policy is subject to it being violated and not being involved in.[268] In other words, it seems that the importance of public policy in the mind of the relevant countries is greater than that of in their practice. For the enacting states of New York Convention, in general, their courts will cite the public policy for rejecting the efficiency of a foreign arbitral award in the very limited circumstances.[269] The applicable extent of public policy defense is getting narrow, but it is undeniable, the interpretation of public policy by each state is still inconsistent, and the consequential arguments have arisen continuously. It seems the apprehension of the parties is still unable to be eliminated. Thus, the writer holds that it is imperative that some definite interpretation and the fundamental principle of utilization should be added to the existing international conventions and treaties on their mandatory rules and public policy by each state. Though this legislation may not be unanimous by each state, it however can establish the demonstrative effect at least, and the remarkable efficiency will be produced gradually. Thus, the difficulties of arbitration only existed in international commercial arbitration can be resolved step by step. After all, the Arbitration Acts of each state are inclining to unify, it is not only advantageous to the parties, also beneficial to the development of international commercial arbitration. It is not too late to do it corporately by each state now.
 
 
 
 
* Ph.D. Attorney-at-Law. Published in Zhong Wang Law Review on October 3, 2013 .
 
 
[1] Lew, J. Applicable Law in International Commercial Arbitration, 2nd ed, 1978,p.87
2 Under the New York Convention of 1958 Article v.(1)(d), it states:
“Recognition and enforcement of the award maybe refused, at the request of the party furnishes to the competent authority where the recognition and enforcement is sought, proof that: The composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance the law of the country where the arbitration took place; or…”
[3] Final Award of 20 July 1992,No.1491, reported in (1993) 18 Y.Comm.Arb.80 at 85.
[4] Ibid, at 532.
[5] Lew, J., supra note 1,at 532.
[6] F.K.von Savigny, “ System des heutigen Romischen Rechts,”1849 Vol. VIII, as summarized in F.K.Juenger, American and European Law, 30AJC (1982) p.123.
[7] Ibid.
[8] Ibid
[9] Brocher,  C.Nouveau traite de droit international prive, Vol.1. (1876) p.149.
[10] I bid.
[11] Zhilsov A.N., “Mandatory and Public Policy Rules in International Commercial Arbitration(1995) NILR,XLII, pp.90-91.
[12] Chukwumerije,O.,CHOICE OF LAW IN INTERNATIONAL COMMERCIAL, 1994, p.180.
[13] Award of 27 May 1991, (1992) 17 Y.Comm. Arb.11.at pp.27-29.
[14] Dryles, M.“Reflection on the E.E.C.Contractual Obligations Convention-An Australian Perspective,” in P.North(ed) Contract Conflicts: The E.E.C. Convention on the Law Applicable to Contractual Obligations-A Comparative Study (Amsterdan:North-Holland Publishing Company, 1982) 323 at p.331.
[15] Final Award of 20 July 1992,No.1491, reported in (1993) 18 Y.Comm.Arb.80 at 85.
[16] S 27(2) of the English Contract Terms Act.
[17] Triebel, V.“The Choice of Law in Commercial Relations: A German perspective” (1988) 37 I.C.L.Q 935 at 939.
[18] Forde, “The ordre public Exception and Adjudicative Jurisdiction Conventions,”(1980) 29 I.C.L.Q., p.259.
[19] The Constitution of the United States of America,  Amendment V (1791), Amendment 14 (1868).
[20] Van den Berg,The New York Arbitration Convention of 1958,1981, p.359.
[21] De Enterria, J.G.“The Role of Public Policy in International Commercial Arbitration,”(1990) 21 Law and Policy in International Business, p.401.
[22] See Zhilsov, A.N., supra note 11, at pp.94-95.
[23] Lew, J.supra note 1,at 532.
[24] Ibid, at 532.
[25] Rubino-Sammartano, M. International Arbitration Law, 1990,p.291.
[26] Ibid, at pp.299-300.
[27] Zhilsov, A.N., supra note 11, at 100-101.
[28] Ibid.
[29] Bockstieegel, K-H.  “Public Policy and  Arbitrability”, in Comparative Arbitration Practice and Public Policy in Arbitration (P. Sanders ed., 1987), pp.179-180. 
[30] Zhilsov, A.N. supra note 11, at 95.
[31] Ibid.
[32] Zhilsov, A.N. supra note 11, at 95-96.
[33] Cheshire and North’s, Private International Law, 1987,19th ed., pp.149-150.
[34] French Civil Code, Art.1052.
[35] Ministery of Public Works v. Societe Bee Freres, Cour d’ Appel, Paris, 24 February 1994; Revue de l’ arbitrage, no.2, 1995,  pp.275-285.
[36] Khan-Freund,“Reflections on Public Policy in the English Conflict of Laws,” 38 Transactions Grotius Society 39(1953), at 41.
[37] Niboyet, Traite, tone III, para.1021, at 493.
[38] Dicey and Morris, The Conflict of Laws, 11th ed, p.71.
[39] Lew, J. supra note 1, at 532.
[40] Batiffol-Lagarde, Traite, supra.354,at 444.
[41] Lew, J.supra note 1,at 532.
[42] Forde, M. “The ‘ordre public’ Exception and Adjudicative Jurisdiction Convention,” 29 I.C.L.Q (1980) at p.260.
[43] Lative, P., “Transrational (or Truly International) Public Policy and International Arbitration”, in Comparative Arbitration Practice and Public Policy in Arbitration 261(p. Sanders 1987) p.278.
[44] Mehren, Von.“ Recognition and Enforcement of Foreign Judgement-General Theory and the Role of Jurisdictional Requirements”,(1981)167 Recueil des Cours II, p.47.
[45] I bid.
[46] De Enterria J.G.“The Role of Public Policy in International National Commercial Arbitration ” (1986) Vol.2.No.4, Arbitration International, p.392
[47] Paulson & Sovern,“Public Policy in the Conflict of Laws”, 56 Colum.L.Rev.969 (1956)
[48] Mehren, Von.“ Recognition and Enforcement of Foreign Judgments”, in 167 Recueil Des Cours: Collected Courses of the Hague Academy of International Law 1980, II at 47.
[49] New York Convention;  Art.v.2 (b). See Mehren, Von. Supra note 47, at 47.
[50] Sarders,P.Trends in the Field of International Commercial Arbitration, Recuiel des Cours l’ de droli international, Hagve, 1975-11,p.224.
[51] See Lative, supra note 42,at 260 (stating that “the very nature of private international law…”is “based on the fundamental distinction between ‘domestic’ situations and ‘international’ situations...”
[52] See Lalive, supra note 42, at 360
[53] I bid, at 260-261.
[54] Sanders, P. “Trends in the Field of International Commercial Arbitration”, (1975) 145 Recueil des Cours, II, pp.224, 297.
[55] Matray & Martens, Arbitrage et order Public Interne,1978 REVUE DE ARBTRAGHE REV.ARB95,108.
[56] CODE DE PROCEDURE CIVILC.PR.CIV§1498(1986)
[57] C. PR.CIV.Art.1498.
[58] See Sanders, P., supra note 42,at 224. Howard M. Holtzmmann, 60 Years of ICC Arbitration: A Look at the Future,1984, p.365.
[59] Fritz Scherk v. Alberto Culv Co., 417 US 506(1974), 1Yearbook Commercial Arbitration, 1975, p. 203.
[60] Berglin, Contra. “The Application in United States Courts of the Public Policy Provision of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards”, 4 Dick. J.Int’l L.167.175 (1986).
[61] Matter of Fotochrome,  517 F.2d 512 (2nd Cir.1975), 1 Yearbook Commercial Arbitration, 1976, pp202-203.
[62] 508 F.2d 969 (2d cir.1974). See also Berglin, supra note 47, Recognizing that Biotronik “left unanswered the question of whether fraud should be a proper defense under the public policy provision.” Berglin pointed out that the Supreme Court in Scherk.417 U.S. at 519.
[63] Firma Ligna v. Baumgarther & Co.A.G., Zivikammer des Obergerichtes des Kantons Zurich, March 15,1957.
[64] Oberlandes gericht of Hamburg, April 3,1975,2 Yearbook Commercial Arbitration, 1977,p.240. Bundesgerichishof, Judgment of May 15,1986,12 Yearbook Commercial Arbitration, 1987,p.490.
[65] 1981 France, Code of Civil Procedure, Art, 1052.
[66] Rule2.
[67] Fender v. St John-Mildmay (1938) A.C. at p1, 12.
[68] Lew, J.supra note 1, at 532.
[69] Loucks v. Standard Oil Co., 224 N.Y. at 99,111,120,N.E at 198; 202(1918).
[70] See Lew, J., supra note 1,at 95.
[71] Rousillon v. Rousillon (1880) 14 Ch.D.at 351
[72] Kaufman v. Gerson (1904) 1 K.B.591 (C.A.)
[73] Dynamit A.G.v.Brown (1954) 1 W.L.R.at 779
[74] Regazzooni v.K.C.Sethia,Ltd (1958) A.C. at 301.
[75] Smith v.Browne (1701) Holt K.B. at 495.
[76] Cf Von Lorange v. Administrator of Austrian Property (1927) A.C. at 641,653
[77] Wolff v. Oxholm (1817) 6 M&S. at 92.
[78] Oppenheimer v. Cattermole (1976) A.C. at 249,265,276-278,282-283.
[79] Bertram-Nothnagel, “Enforcement of Foreign Judgments and Arbitral Awards in West germany”,17 Va. J. Int’l L. 385, 390 (1977)
[80] See De Enterria, J.G., supra note 46, at 406.
[81] Kahn, Die Lehre vom Order Public, Abhandlungen ans dem Internationalem Privatrecht, in 39 Jhering Jahrbucher Fur Die Steiner, H. & Vagts. D., Transnational Legal Problems, 1986, 3rd ed, pp.728-732. D.Holleaux, J. Foyer & G.DE GEOUFFRE, DROIT INTERNATIONAL PRIVE, 1987, p.443.
[82] Steiner, H. & Vagts. D., Transnational Legal Problems, 1986, 3d ed, pp.728-732. D.Holleaux, J. Foyer & G.DE GEOUFFRE, DROIT INTERNATIONAL PRIVE, 1987, p.443.
[83] Kahn-Freund,“ Reflection on Public Policy in the English Conflict of Laws”, 38 Transactions Grotius Society 39, 1953, p.58.
[84] Paulson & Sovern, “Public Policy ” in the Conflict of Laws, 56 Colum. L.Rev. 1956, p981.
[85] De Enterria, J.G., supra note 46, at 408
[86] ICC Rules of Arbitration, Art.12.
[87] Lative, Arbitrage International et Ordre Public Suisse, 97 Zeitschrift Fur Schweizerisches Recht 529 (1978).
[88] Ferrante, Enforcement of Foreign Arbitral Awards in Italy and Public Policy, in HOMMAGE A FRREDERIC EISEMANN 86 (1978) p.84.
[89] ICC Rules of Arbitration, Art.13. UNCITRAL Arbitration Rules. Art.33., UNCITRAL Model Law. Art.28.
[90] DE ENTERRIA, J.G., supra note 46,at 409-410.
[91] New York Convention Art.V.
[92] Thieffy,  “The Finally of Awards in International Arbitration”, (1985) 2 J.I.A., p36.
[93] See DE ENTERRIA, J.G., supra note 44, at 410.
[94] New York Convention Art. V (2).
[95] McClendon, “Enforcement of Foreign Arbitral Awards in the United States ”, 4NW.J.INT’L L. & Bus 58,67 (1982)., Thieffy, supra note 50, at 36.
[96] 1927 Geneva Convention Art. I.(e).
[97] Van den Berg, The New York Arbitration Convention of 1958, 1981, p.371.
[98] Redfern,A.and Hunter, M., LAW AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION,2nd ed, 1991,p.137.
99  Redfern,A.and Hunter, M., LAW AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION,3rd ed, 1999,p.20.
100  Comment, “The Public Policy Defense to Recognition and Enforcement of Foreign Arbitral Awards”, 7 CAL. W. Int’l L.J. (1977) p228. 234-35.
101  Scherk v Alberto Culver Co. 417 U.S.506
102  Mitsubishi Motors Corp. v. Soler Chrysler Plymouth. 473 U.S. 614
103  See Comment, supra note 56, at 228, 234-35
104  See 417 U.S. at 506., 346 U.S.427 (1953)., 473 U.S.614 (1985).
105  New York Convention Art. V (2).
106  Mcllaughlin & Genevro,“ Enforcement of Arbitral Awards Under the New York  
    Convention-Practice in U.S. Courts”, 3 Int’l Tax & Bus. at 249.266(1986)
107  De Enterria, J.G., supra note 46, at 413.
108  Ferrante, “Enforcement of Foreign Arbitral Awards in Italy and Public Policy”, in HOMMAGE A  
    FRREDERIC EISEMANN 86 (1978).
109  Mustill, Transnational Arbitration and English Law, in 3 Current Legal Problems 1984, at 134.
 
110 See Comment, “The Public Policy Defense to Recognition and Enforcement of Foreign Arbitration Awards”, 7 Cal. W. Int’l L.J.228, 234-35 (1977). 
111 See Van den Berg, supra note 20, at 299.
112 See De Enterria, J.G. supra note 46 at 414
113 Ibid, at 416-17.
114 See Van den Berg, supra note 20,at 376.
[115] 1958 New York Convention, Art.5. (1).(a),(b),(e), 2(b).
[116] Redfern,A.and Hunter, M., LAW AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION,3rd ed, 1999,p.20.
[117] New York Convention, Art.v. (l) (a)., Model Law, Art.36.
[118] See Lew.J., supra note 1, at 556.
[119] See Dicey and Morris, supra note 38, at 93.
[120] Robbinson v. Bland (1760) 2 Burr. at 1077,1084., Regazzoni v.K.C.Stthia,Ltd. (1956) 2 Q.B. at .490,524 (C.A.)
[121] See Dicey and Morris, supra note 38, at 71.
[122] Ibid, at 71.
[123] Hyde v. Hyde(1866) L.R.I.P.& D.at 130.
[124] Baindail v Baindail (1946) at 122 (C.A.); post, p.291.
[125] Bamgbose v. Daniel (1955) A.C.at 107.
[126] Coleman v. Shang (1961) A.C. at 481 (P.C.)
[127] See Dicey, A and Morris, J., supra note 37, at 72.
[128] Fender v. St. John-Mildmay (1938) A.C. at 1,12.
[129] See Dicey, A and Morris, J., supra note 37, at 583.
[130] Lew, J., supra note 1,at 590. See Chukwumarije, O., supra note 11, at 85-86.
[131] Paulsson, J. “Delocalization of International Commercial Arbitration; When and Why It Matters” (1983) 32 I.C.L.Q., p.57.
[132] Ibid.
[133] See Redfern, A.and Hunter, M., supra note 113 at 90., Paulson, J.“Arbitration Unbound: Award Dutached from the law fits Country of Origin”, (1981) 30,I.C.L.Q, p.358., Ibid, at 53.
[134] See Dicey, A and Morris, J., supra note 38, at pp541-542.
[135] Mann, F.M.“Lex Facit Arbitrual Liber Amicorum for Domke”, (P.Sanders, ed) 1967,pp.159-161.
[136] Paulsson, J. “Arbitration Unbound: Award Detached from the Law of ICS Country of Origin”, 30 I.C.L.Q, 1981,pp.359-364.
[137] New York Convention, Art, 1(1).
[138] See Van den Berg, supra note 20,at 33.
[139] See Paulson, J.supra note 136,at 369.
[140] Gotaverken Arendal AB v. Libyan General National Maritime Transport Company (1981) 6Y.Comm.Arb., p.221, 237.
[141] Paulson, J.“The Role of the Swedish Court in Transnational Arbitration,”(1981) 21 Virginal Journal of International Law pp.211,236-243.
[142] The Declarations include (1)Declaration of the Government of the Democratic and Popular Republic of Algeria (2)Declaration of the Government of the Democratic and Popular Republic of Algeria Concerning the Settlement of Claims by the Government of the United States of America and the Government of the Islamic of Iran. (1981) I.L.M.Vol.20 pp.224-233.
[143] Toope, Stephen J. Mixed International Arbitration, Grotius Publications Limited,(1990) pp.373-374.
[144] See Van den Berg, supra note 20, at 33.
[145] Atterbury, S.W.“Enforcement of A-National Arbitral Awards Under the New York Convention of 1958,”(1992) 32 Virginia Journal of International Law, pp.487-489.
[146] Sanders P., Trends in the Field of International Commercial Arbitration,1975,2 Recuiel des Cours, at 205,275.
[147] Saudi Arabia v. Arabian American Oil Co.(1963) 27.I.L.R.P.,117 the arbitrators held that the arbitration was directly governed by international law., Libyan American Oil Co. v. Government of the Libyan Arab Republic (1981) 70. International Legal Materials, at 1,the Arbitrator in effect held that the same view by declaring that“ the arbitrator in this procedure, shall be guided as much as possible by the general principles contained in the Draft Convention on Arbitral Procedure elaforated by the international Law Commission of the United Nations in 1958.”
[148] See supra note 128.
[149] Libyan American Oil Co. v. Government of the Libyan Arab Republic (1981) 70.
[150] Avanession, A.B. “The New York Convention and Delocalisation ARBITRATION Award,”(1991)8 J.I.A.,No.1,pp25-26.
[151] Art. v.(2).(a).
[152] Mosconi, F.“Exception to the Operation of Choice of Law Rules,”217 Hague Recuil (1989-V)
pp.13-217
153 Strenger, I. “ The Applicable by the Arbitration of Public Policy Rules to the Substance of the Dispute ”, in Cooperative Arbitration Practice and Public Policy in Arbitration, pp.345-345.
154  Saleh,S. The Recognition and Enforcement of Foreign Arbitral Awards in the States of the Arab Middle East’ in J.Law,ed., Contemporary Problems in International Arbitration (1986) pp.340-341
 
[155]Baade,H.“Operation of Foreign Public Law”, in International Encyclopedia of Comparative Law(1990),Vol.3.p..20.
[156]Schmitthoff C.M.,Select Essays on International Trade Law,(Chia-Juicheng ed., 1988)p. 593
[157]See Zhilson, A.N.,supra note 10,at 97.
[158]See Lew, J., supra note 1,at 534.
[159]See Baade, supra note 155,at p.20.
[160]See Zhilsov,A.N, supra note 11,at p.100.
[161]See Van den Berg,supra note 20 ,pp.366-367.
[162]Sanders,P.“Commentory”, in 60 Years of ICC Arbitration-A Look at the Future (1984),p.364
[163]See De Enterna,.J.G.“The Role of Public Policy in International Commercial Arbitration”(1990) 21 Law and Policy in International Business,pp. 417-427.
[164] Mustill, “Transnational Arbitration and English Law” Current Legal Problems,1984,p.134.
[165] New York Convention 1958, Art V.(2.)(b).
[166] See McClelland, Towards a More Muture System of International Arbitration: The Establishment of Uniform Rules of Procedure and Elimination of the Conflict of Laws Question, 5N.C.J. In’l & Comm’l Rec.,1980,p.186.
[167] Washington Convention, 1965,Art53,54.
[168] Broches,A.,Awards Rendered Pursuant to the ICSID Convention :Binding, Finality, Recognition, Enforcement, Execuition, 2 ICSID Review-Foreign Investment Law Journal 289(1987), at 304.
[169] 508 F.2d 969(2d.CiY. 1974)
[170] Ibid, at 972.
[171] Ibid.  
[172] Ibid.
[173] I bid. The defenses raised were as follows:Enforcement of the award would violate the public policy of the United States; the award represents an arbitration of matters not appropriately decided by arbitration; the tribunal denied Overseas an adequate opportunity to present its case; the award is predicated upon a resolution of issues outside the scope of the contractual agreement to submit to arbitration; and the award is in the manifest disregard of law..
[174] 508 F. 2d at 974
[175] Ibid.
[176] Ibid. “(W)e have recently stated that the “public policy” limitation onsicthe Convention is to be construed narrowly to be applied only where enforcement would violate the forum state’s most basic notions of morality and justice. (Citing Parsons. 508 F.2d at 974).
[177] 607 F. Supp.1016 (E.D.Mo.1985).
[178] Ibid at 1017.
[179] Ibid. at 1019. McDonnell Douglas argued that “the dispute is not subject to arbitration because the convention and theUnited States ArbitrationAct do not apply where a public policy renders the question an inappropriate subject for arbitration or incapable of arbitration.
[180] Ibid at 1020.
[181] Ibid.
[182] New York Convention Art II(3).
[183] Convention on the Execution of Foreign Arbitral Awards. Sept.26, 1927. Art.I (e)
[184] Article 36(1) (b) of the UNCITRAL Model Law follows the New York Convention 24 I.L.M.1302 (1985).
[185] MuYs,M. & Keutgen, G.,L’arbitrage En Droit Blege Et International, 563 (1981).p.350
186 Chesire, G.C.& North, P.M., Private International Law, 1987 11thed, p.131.
[187]Bremen v. Zapata Off-Shore Co., 407 U.S.I (1972).
[188]Berglin, “Contra, The Application in United States Courts of the Public Policy Provision of the
Convention on the Recognition and Enforcement of Foreign Arbitral Awards 4 Dick,” J. Int’l L. 167.175 (1986)
[189]Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth Inc .473 U.S.614(1985) , p. 623.
[190]Ibid
[191]See English Arbitration Art 1996,Art.4,12,13,24,26 and so on.
[192]See also UNCITRAL Arbitration Rules 1976,Art6-8.
[193]New York Convention,1958, Art. 1.(e).
[194] See UNCITRAL Model Law 1985,Art19., See also Binder, International Commercial Arbitration in UNCITRAL Model Law, 2000, pp.125-126.
[195] English Arbitration Act 1996, Art33.
[196] Lord,Rand Salzedo,S., Guide to the Arbitration Act 1996,1996,p.30.
[197] English Arbitration Act.1996,Art.66.
[198] Derains,Y. “Possible Conflict of Law Rules and the Rules Applicable to the Substance of the Dispute” in Sanders,P.(ed), UNCITRAL’S Project for a Model Law on International Commercial Arbitration (Deventer, The Netherlands: Kluwer Law and Tax Action Poblishers,1984) 169 at 179.
[199] EEC Convention, Art.3(3) defines mandatory rules as “rules of law of a country which can not be derogated from the contract”.
[200] Final Award of 20 July 1992, No.1491, reported in(1993) 18Y.Comm.Art.80 at 85.
[201] See Anton,A. and Beaumant, Private International Law, 2d ed, (Edinburgh:W.Green,1990) at 343. See also Art.S.27(2) of the English Uniform Contract Terms Act.
[202] Baniassadi,M.R.“Do Mandatory Rules of Public Law Limit Choice of Law in International Commercial Arbitration? ”,10 Int. Tax & Bus Lawyer (1992) no.1,pp.59-84.
[203] Ibid, p.71-72.
[204] Mayer,P.“Mandatory Rules of Law in International Arbitration”, 2 Arb.Int.(1986) no.4,pp.274-293.
[205] Lando, O,“The Lex Mercatoria in International Commercial Arbitration”, 34 I.C.Q (1985) p.760.
[206] See,e.g., Fumagalli, L.“La legge applicable al merito della Controversia nell’ arbitrateo commerciale internazionale’, 21 Rivista di Diritto International Commercial Arbitration”, 26 Am.Bus.LJ(1988) no.3, p.518.,Lew,J.“Determination of Arbitrators’ Jurisdiction and the Public Policy Limitations on that Jurisdiction”, in Lew, J.(ed), Contemporary Problems in International Arbitration (1986) p.80.
[207] See,e.g.,Art.1(e) of the 1927 Geneva Convention for the Execution of Foreign Arbitral Awards: Art. V(2)(b) of the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards; Art. 36(1)(b)(ii) of the UNCITRAL Model Law; Art. 1498 of the French Code of Civil Procedure; Art. 1076 of the 1986 Netherlands Arbitration Act; Art.59 of the 1988 Spanish Arbitration Law; Art.194 of the Swiss Federal Statute of Private International Law; Art.26 of the 1988 ICC Rules of Arbitration.
[208] See Zhilsov, A.N., supra note11,at 111.
[209] Ibid, at 112.
[210] Opened for signature in Rome on 19 June 1980 (80/934/EEC)
[211] Lando,O.,“The Law Applicable to the Merits of the Dispute” in Sarcevic,P.(ed.)Essay an International Commercial Arbitration (London: Martinus Nijhoff,1989) 129 at 158.
[212] Hague Convention on the Applicable to Agency, Art 16.
[213] See Chukwumerije,O., supra note 12,at 181-182.
[214] Loucks v. Standard Oil Co.(1918)224 N.Y.99.
[215] See Lew,J., supra note 1,at p556.
[216] New York Convention,Art.V.(1).(e)
[217] Schmitthoff,Glive M.,“Finality of Arbitral Awards and Judicial Review”, in Schmittoff’s Select Essays on International Trade Law ( Chia-Juicheng ed.,1988), p.654.
[218] Boydan, M., “Some Arbitration-Related Problem of Swedish Private International Law”, (1990) Swedish and International Arbitration, p.76.
[219] Rubino-Sammartano, M., International Arbitration Law, 1990, p.301.
[220] New York Convention 1958,Art.V. (1).(d),(e).
[221] New York Convention 1958, Art.V. (1).(e).
[222] Fawcett, “Trade and Financo in International Law”,123 Rec.des Cours,215(1968-1).
[223] See Lew,J., supra note 1, at 540.
[224] Ibid.
[225] Lando,O.,“The Law Applicable to the Merits of the Disputes” in Essays on International Commercial Arbitration (Sarcevice, D.ed., 1989), p.158.
[226] ICC,Award of No.1664. a point of Lative,P. However, he changed this opion latter. See also Lative, P., “Transnational (or Truly International) Public Policy and International Arbitration”, in Comparative Arbitration Practice and Public Policy in Arbitration (P.Sanders ed.,1987), p.307.
[227] See the ICC Rules of Arbitration 1976,Art.26.
[228] Lando,O., “The Lex Mercatoria in International Commercial Arbitration”(1985)34 I.C.L.Q.,P.766.
[229] Schnyder, Anton K.,Die Anwe dung des Zustandigen fremden Sachrechts in Internationalen Drivatrecht,Zurich, 1981,p.146.
[230] Heini,A.,Auslandische Staatsinteressen und internationals Privatrecht, in ZSR N.F.1001,1981, pp.65-83.
[231] Bulletin ASA,1992,Vol.1.p.56.
[232] Hochstrasser,D. “Choice of Law and “Foreign” Mandatory in International Arbitration”,(1994) 11 J.I.A., no.1,pp.58-59.
[233] See 17 Y.B. Com.Arb.(1992) pp.212-220.
[234] ICC Award 1399/1966, Doc.No 410/1395,14 April 1966.
[235] Mayer,P., “Mandatory Rules of Law in International Arbitration”, 2 Arb. Int.(1986) No.4, pp.274-293.
[236] See Chukwumerije,O., supra note 12,at 179.
[237] Derains,Y., “Public Policy and the Law Applicable to the Disputes in International Arbitration”, in Comparative Arbitration Practice and Public Policy in Arbitration (P.Sanders ed.,1987),pp254-255.
[238] See Mayer,P., supra note 206, at 284.
[239] Hochstrasser, D. “Choice of Law and “Foreign ” Mandatory Rules in International Arbitration”,(1994) 11 J.I.A.No.1,p.86.
[240] ICC Cases No.761,1859, 2136.
[241] 472 U.S.614 (1985)
[242] Blessing, M., Das neue internationale Schiedsgerichtsrecht der Schweiz Ein Fortschritt Oder ein Riickschritt? In Die Internationale Schiedsgerichtsrecht der Schweiz (11), Karl-Heinz Bockstiegel(ed), Koln, Heymanns, 1989,p.63.
[243] Brown and Houck, Arbitrating International Antitrust Disputes, 7J.Int.Art.1, March 1990,p.77.
[244] See Chukwumerije,O., supra note 11,at189.
[245] ICC case No.1512, 4132.
[246] (1992) 17 Y.Comm.Arb.212
[247] See Ibid,supra note 240.
[248] Ibid, at 218.
[249] See Chukwumerije,O., supra note 12, at 191.
[250] See Hochstrasser, D., supra note 235,at 75.
[251] See Lew, J., supra note 1,at 87. 
[252] Mclaughlin & Genevro, Enforcement of Arbitral Awards Under the New York
Convention-Practice in U.S. Courts, 3 Int’l Tax & Bus Law, 249,266 (1986).
[253] Boissevain v. Weil (1949) 1 K.B.P.482, 490(C.A.); Irish Shipping Ltd. v. Commercial Union Assurance Co. plc (1991) 2 Q.B. 206,219-221 (C.A.)
[254] See ChukwumeriJe, O., supra note 12,p.185.
[255] Skyes, E. and Pryles, M., Australian Private International Law, 2d ed., (Sydney: The Law Book Company, 1987) at 546.
[256] Castel, J., Canadian Conflict of Law, 2nd ed. (Toronto: Butter worths, 1986) p.153 Castel notes that
Canadian Courts will note recognize or enforce a right or power that is “contrary as the forum’s stringent public policy or essential public or moral interest”.
[257] See Chukwumerije,O., supra note 12, p.185.
[258] See Hochstrasser, D., supra note 239, pp.61-66.
[259] Rooij, R. and Polak, M., Private International Law in the Netherlands, 1987,p.189.
[260] See Lew, J., supra note 1,at 532.
[261] See Rubino-Sammartano, M., supra note 226,at 291.
[262] New York Convention 1958,Art. V (2).(b).
[263] New York Convention 1958,Art. V. (1).(e).
[264] See Lew J., supra note 1,at 545-548.
[265] Berg V.D.,“hould on International Arbitrator Apply the New York Convention of 1958? ”, in Art of Arbitration 197 (J.Schulte & A.Van Den Borg eds.1982)
[266] Goldman. Les Conflicts de Lois dans L’Arbitrage International de Droit Prive’, in 109 ACADEMIE DE PROIT INTERNATIONAL, RECUEIL DES COURS 425 (1963)
[267] Ibid, at 433.
[268] See De Enterria, J.G., supra note 21 at 406.
[269] See Van den Berg, supra note 20at 366-367.