A Transnational Legal Process Perspective on Norm-Making in International Arbitration

Abstract

The procedural framework of international arbitration is comprised of a vast amount of different types of norms that have been formulated by a wide range of actors through diverse processes. While the study originates from the question of how norms applicable to the procedural aspect of arbitration (hereinafter norms) should be made, it ultimately addresses ways international organizations, broadly defined, can formulate effective norms in an efficient manner. While much effort has been made to understand the formulation and application of individual norms, there has been very little research on their making in a comprehensive manner. Moreover, such norms do not easily fall under the traditional categories of international or domestic law, nor under public or private law. In fact, they do not easily fit into the traditional notion of law. Therefore, the notion of transnational legal process is used to provide a theoretical framework for examining and understanding the formulation of the procedural framework of international arbitration as well as individual norm-making. Transnational legal process refers to the theory and practice of how public and private actors (nation-states, international organizations, multinational enterprises, NGOs and private individuals) interact in a variety of public and private, domestic and international fora to make, interpret, enforce and ultimately, internalize rules of transnational law. Party autonomy forms the basis of the procedural aspects of international arbitration. Just as parties agree on arbitration to resolve disputes, its procedure is also determined by the parties. This allows for procedural flexibility, one of the advantages of arbitration as a dispute resolution method. A consequence of the parties procedural autonomy is that the application of the norms to international arbitration generally requires some sort of consent, agreement or opt-in (hereinafter, generally referred to as acceptance) by the parties. This acceptance-based characteristic of the norms requires certain adjustments to the transnational legal process, particularly in norm-making. Suggestions with regard to norm-making can only be made after a detailed examination and assessment of past norm-making. For that purpose, the study undertakes an empirical survey of the making of key norms in international arbitration since 2006. While the actors involved and the process leading to those norms differed to a certain degree, contemporary norm-making has generally aimed at addressing the integrity of the arbitration procedure as well as its procedural efficiency, while maintaining a balance between the two. Norms responding to the practical needs of international arbitration were formulated by international inter-governmental and non-governmental organizations through a dynamic and recursive cycle. This involved a preparatory stage where the desirability and feasibility of norms were considered, followed by substantive deliberations and public consultations, with the resulting norm formally adopted by the respective international organization. The study reveals that a distinctive aspect of norm-making in international arbitration is the extensive role of non-State actors. Not only were they the preponderant users of the norms, but also the prevailing actors in norm-making. Whereas the negotiations leading to the New York Convention, enactments of national arbitration legislation and the preparation of the Model Arbitration Law involved mostly States, contemporary norm-making indicates a more significant role of non-State actors. Almost all recent procedural norms were formulated by international organizations, some with the involvement of States and some without. International organizations not only formulate norms but also take part in norm-making in other fora as well. They also provide the setting for other non-State actors to actively participate in norm-making. That is why the study pays particular attention to the increasing role of international organizations in norm-making. The irony of the study may be that normativity is not derived directly from the norm itself. While circumstances may vary, acceptance by parties of a norm is generally required for any norm to become applicable in arbitration practice. This additional element required for obtaining normativity provides a further explanation of why norm-making resembles a transnational legal process. Even when an international organization has the authority to formulate norms, the legitimacy of the norms is derived from the actors involved and the process leading to the norms. Moreover, the interaction among the actors involved in norm-making to reflect practical needs and diverse interests as well as the consensus obtained in the final adoption of the norms have an impact on the acceptability of norms and thus their normativity. In summary, transnational legal process ensures that the norm is en route to obtaining both legitimacy and normativity. The international political and economic landscape is changing constantly. Nonetheless, the study concludes that international organizations will continue to play a significant role in support of international arbitration through their formulation of procedural norms applicable to international arbitration. The answer to the ultimate question on how international organizations can make effective norms lies in the tool used for the purposes of the study: realization of a transnational legal process. Norm-making must further take into account the peculiarities of the norms as well as the relevant actors both in international arbitration and in norm-making. International organizations must aim at providing a multilateral and inclusive forum for discussing the practical needs of norms and their contents. The study draws the attention of international organizations, in particular, to engage States that are still in their earlier stages of developing an international arbitration regime and to seek the perspectives of corporations and businesses, the main users of international arbitration. Such efforts by international organization will not only ensure the effectiveness of norms but also contribute to the broader transnational legal process leading to the overall procedural framework for international arbitration. Realization of a transnational legal process in a multilateral and inclusive forum, adoption of norms by consensus and further promotion of norms are the ideal elements for norm-making. However, they also pose a practical challenge, the need for extensive human and financial resources. In this respect, the study includes some practical suggestions to ensure the efficiency of the norm-making itself, which include, among others, coordination among the number of norm-making initiatives by international organizations. In summary, the study provides a transnational legal process perspective on norm-making in international arbitration. Transnational legal process has provided the overarching theoretical framework for understanding norm-making in the field of international arbitration as well as the rationale for norm-making to be conducted in such manner. The study concludes that transnational legal process further provides the necessary guidance to international organizations involved in norm-making in the field of international arbitration, which would assist them in contributing to the formation of a sound procedural framework for international arbitration.