National Courts and International Arbitration: A Double-edged Sword?

Abstract

International arbitrations play a key role in resolving cross border commercial disputes. Parties choose international arbitration primarily because it enables the parties to have their disputes adjudicated without any involvement of national courts. It is clear that the supervisory role of national courts is necessary for the proper conduct of international arbitrations and to ensure that the arbitral process meets the due standards of fairness. However, in recent times, the involvement of national courts in aid of effective arbitrations seems to be a growing concern since their involvement tends to hinder the arbitral process rather than protecting the same. In many cases, it can be seen that the supervisory and curial powers are being misused by national courts, the victims of which are parties to international arbitrations. This is most apparent in the Asian subcontinent. This paper discusses in detail the problems arising out of the national court’s role in international arbitrations and highlights few of the leading cases where the national court’s involvement has adversely affected international arbitrations. It also notes the possible dangers associated with undue interferences by national courts which may give rise to state liability under international law. In this connection, the recent landmark decision of Saipem v. Bangladesh is analyzed which sends a clear warning to all national courts exercising supervisory jurisdiction over international arbitrations to exercise their powers cautiously.