Defining Issues of Public Policy Exceptions in International Commercial Arbitration: Promoting Uniform Model Norms

Abstract

The concept of the ‘public policy exception’ in International Commercial Arbitration (ICA) is pivotal in assessing the enforceability of arbitral awards. Although ICA was initially designed to enhance predictability and minimize political interference, this exception permits national courts to deny enforcement of awards that contradict domestic public policy. This provision has sparked considerable debate and resulted in a lack of consistency in judicial review standards across various jurisdictions. The phrase ‘public policy’ is notoriously ambiguous and exhibits considerable variation among states, often embodying fundamental legal, moral, political or social principles that are distinctive to each nation. Attempts to delineate and restrict this exception have been inconsistent; some nations adopt narrow interpretations that align with international standards, while others maintain broader, more adaptable definitions. The interplay between procedural and substantive exceptions further complicates the understanding of public policy in ICA, potentially leading to conflicts between national and international norms. To foster uniformity, a harmonized approach is necessary, one that reconciles state sovereignty with the principles of international arbitration. This may involve the adoption of transnational public policy standards or the establishment of clearer guidelines within international instruments such as the New York Convention and UNCITRAL Model Law. Consequently, achieving consistency in the application of the ‘public policy exception’ is crucial for enhancing the predictability and efficacy of international arbitration.