‘A critical analysis of the ‘writing’ requirement in relation to the formal validity of international commercial agreements to arbitrate

ΑΡΘΡΟΓΡΑΦΙΑ / December 11, 2019: Τρέχουσα Νομική Επικαιρότητα NewsRoom

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‘A critical analysis of the ‘writing’ requirement in relation to the formal validity of international commercial agreements to arbitrate

Μελέτη του Βασίλη Αποστολόπουλου, Δικηγόρου LLM

The ‘writing’ requirement for the contractual validity of international commercial arbitration agreements

Πρόλογος

Η Διεθνής Εμπορική Διαιτησία συνιστά έναν εναλλακτικό εξωδικαστικό ιδιωτικό τρόπο επίλυσης των διαφορών που στηρίζεται στην έγκυρη συμφωνία των μερών για την προσφυγή στη διαιτησία. Τα τελευταία δε 50 χρόνια έχει εξελιχθεί σε κυρίαρχη μέθοδο επίλυσης εμπορικών διαφορών που ενέχουν ένα διεθνές στοιχείο/σύνδεση, παρά τον αρχικό σκεπτικισμό με τον οποίο ιστορικά αντιμετωπίστηκε.

Η έγκυρη συμφωνία των μερών για την προσφυγή στη διαιτησία είναι απαραίτητη προϋπόθεση για την έναρξη διαιτητικών διαδικασιών. Άνευ μιας έγκυρης, συναινετικής φύσεως, διεθνούς εμπορικής συμφωνίας, η οποία να ορίζει την διαιτησία ως τον τρόπο επίλυσης τυχόν διαφορών, τα μέρη δεν υποχρεούνται να προσφύγουν σε αυτήν. Συνεπώς, τα δικαστήρια δύνανται να επιβάλλουν διαιτητικές διαδικασίες μόνο στην περίπτωση που υφίσταται μια έγκυρη διεθνής εμπορική συμφωνία διαιτησίας, στην οποία να συναινούν και τα δύο μέρη.

Έτσι, βλέπουμε ότι μια έγκυρη διεθνής εμπορική συμφωνία διαιτησίας και η συνακόλουθη νόμιμη εφαρμογή της συνιστά θεμελιώδη λίθο και αναγκαίο στοιχείο σχεδόν κάθε διεθνούς διαιτητικής διαδικασίας, καταγράφοντας τη συναίνεση των μερών για την παραπομπή της υπόθεσής τους σε αυτήν.

Ανάμεσα στις διεθνείς συμβάσεις που εξυπηρετούν το σκοπό ενός ενιαίου μηχανισμού εφαρμογής διαιτητικών αποφάσεων που εκδόθηκαν σε χώρες διαφορετικές από αυτές στις οποίες επιδιώκεται η αναγνώριση και εφαρμογή τους, η πλέον σημαντική και κυρίαρχη είναι η Σύμβαση της Νέα Υόρκης 1958. Η τελευταία διαπραγματεύθηκε στο πλαίσιο των Ηνωμένων Εθνών και ενσωματώθηκε από περισσότερα από 140 κράτη στο εθνικό τους δίκαιο, συμπεριλαμβανομένων και των 27 κρατών-μελών της Ευρωπαϊκής Ένωσης.

Υπό το φως της διαφορετικής προσέγγισης της διαιτητικής νομοθεσίας κάθε κράτους απέναντι στις τυπικές ή μη προϋποθέσεις  που απαιτούνται για την εγκυρότητα της διεθνούς εμπορικής συμφωνίας διαιτησίας, η Σύμβαση της Νέας Υόρκης παρέχει ένα ισχυρό, ενιαίο μηχανισμό αναγνώρισης και εφαρμογής ξένων διαιτητικών αποφάσεων, υποχρεώνοντας τα εθνικά δικαστήρια κάθε συμβαλλόμενου κράτους να  αναγνωρίζουν ως δεσμευτικές και να εφαρμόζουν κάθε συμφωνία που έχει καταρτιστεί «εγγράφως», σύμφωνα με το Άρθρο II. Με τον τρόπο αυτόν η παραπάνω Σύμβαση αποσκοπεί στην ενοποίηση και την εναρμόνιση της ερμηνείας από το εθνικό δίκαιο διαιτησίας κάθε κράτους και τους τοπικούς δικαστές της διατύπωσης της απαίτησης έγγραφου τύπου σε έγχαρτη ή ηλεκτρονική μορφή του Άρθρου II και τη συνακόλουθη εφαρμογή των διεθνών εμπορικών συμφωνιών διαιτησίας.

Σκοπός της συγκεκριμένης μελέτης είναι να διερευνήσει σε βάθος την παραπάνω απαίτηση «έγγραφου» τύπου της ανωτέρω Σύμβασης στο Άρθρο II  σχετικά με την τήρηση των τυπικών προϋποθέσεων που απαιτούνται για την τυπική εγκυρότητα της διεθνούς εμπορικής συμφωνίας διαιτησίας ( σε έγχαρτη μορφή ή σε ηλεκτρονική απεικόνιση/αποτύπωση, ενν. είτε υπογεγραμμένη και από τα δύο μέρη σε μια έγγραφη συμφωνία, είτε να περιέρχεται σε ανταλλαγή έγγραφων προτάσεων σε σύγχρονα μέσα επικοινωνίας που καταγράφουν τη διαιτησία ως τη μέθοδο επίλυσης σε περίπτωση διαφοράς). Σκοπός επίσης της παρούσας μελέτης είναι να εξετάσει το βαθμό στον οποίο διασφαλίζεται η συνέχιση της ενοποίησης και εναρμόνισης της ερμηνείας του παραπάνω ορισμού του Άρθρου II και της συνακόλουθης εφαρμογής των διεθνών εμπορικών συμφωνιών διαιτησίας, υπό τω φως των διαφορετικών κριτηρίων που επικρατούν  στη δικαιοδοσία του κάθε κράτους σχετικά με την τήρηση των τυπικών προϋποθέσεων για την εγκυρότητα των παραπάνω συμφωνιών, καθώς και άλλων ερμηνευτικών ή μη οργάνων της Επιτροπής του Διεθνούς Εμπορικού Δικαίου των Ηνωμένων Εθνών.

 



‘A critical analysis of the ‘writing’ requirement in relation to the formal validity of international commercial agreements to arbitrate’

Introduction

To begin with, unlike Court litigation, arbitration is an alternative private dispute resolution method, premised upon the parties’ agreement. No arbitration proceedings may be commenced, unless the parties have an international commercial agreement to arbitrate. In the absence of a valid arbitration agreement, arbitration cannot be imposed. Thus, courts can only compel arbitration where valid agreements to arbitrate exist. So, it can be seen that the agreement to arbitrate and its legal force is the foundation stone and a necessary ingredient of nearly every international arbitration process which records the parties’ consent to refer their disputes to arbitration. As such, because of the widespread consensus among various national arbitration laws that agreements to arbitrate must be enforced, it is seen as one of the most significant aspects of international commercial arbitration. It is to be noted that provisions giving binding effect to such agreements can be found in the majority of national arbitration laws. The fundamentally consensual nature of arbitration is well reflected in the New York Convention and, in particular, in Article II (discussed further below).

The effect of enforcing arbitration agreements will be to bind the parties to submit their disputes falling within the scope of the agreement to arbitration before going to court. However, it is often the case that notwithstanding their prior mutual commitment to arbitrate their dispute, parties may reconsider their initial agreement and seek to have their dispute resolved by a favourable domestic court or hinder the overall arbitral process, so as to avoid being engaged into arbitration proceedings. The former case will often involve Courts determining whether an agreement to arbitrate has been validly entered into. If parties seek to take the matter to court when they have agreed to arbitrate their dispute, the court of law will not allow this. This means that if a party has commenced court proceedings instead of arbitration proceedings, the court will stay its own proceedings if it finds that those proceedings were initiated in breach of the arbitration clause, this fundamental principle being laid down in s.9 of the Arbitration Act 1996 (discussed further below). So, it can be seen that there are many cases involving parties arguing whether or not an international commercial agreement which binds them to arbitrate has been validly concluded either for tactical reasons or genuine reasons. Hence, by enforcing agreements to arbitrate Contracting States promote the private arbitration process.

On the other hand, the Court of Appeal of California [ Vitters v Solesbee Auto Crafts, Court of Appeal of California, 2018; HR Specialist: California Employment Law, 2018, Vol. 12(9), p 3(1)] has found that when a new agreement to arbitrate is being implemented, without acknowledgment of receipt and acceptance, there can be no valid agreement to arbitrate. That means that if someone refuses to sign the arbitration acknowledgment, he may not be bound by the terms of an agreement to which he has not agreed, which means that if a dispute arises it probably won’t be resolved through the arbitration process. In such a case, any claims may proceed in the national court.

It is to be noted that prior to the Arbitration Act 1996, in order to oust the court’s jurisdiction parties used the so-called ‘Scott v Avery’ clauses to make the arbitration process a condition precedent to litigation. These clauses were intended to postpone but not annihilate the parties’ right of access to courts to assert their rights under the contract. Should a party commence court proceedings in breach of the ‘Scott v Avery’ clause, the other party could ask the court to order a stay of court proceedings to allow the arbitration process to be conducted first. The ‘Scott v Avery’ clauses originated from the House of Lord’s ruling in the Scott v Avery case [Scott v Avery (1856) 5 HL Cas 811 (HL)], according to which such clauses were legal and enforceable and did not run contrary to public policy.

The continued viability of a mandatory agreement to arbitrate is ultimately a question of contract. In this respect, it must be recognized that such mandatory agreements are only fully effective if the individual terms and conditions are enforceable under an ordinary contract analysis (the same is also true with international arbitration agreements and arbitral awards which need to be effectively and efficiently enforced against the losing party). To put it in a context, the very existence of the arbitral process depends upon a valid agreement, the proper law of which is to be ascertained pursuant to the established common law rules for determining the proper law of an ordinary contract. So, in determining the validity of an arbitration agreement the courts of law will apply the generally-applicable state-law principles governing the formation of contracts for ascertaining the legal grounds upon which parties may be required to submit their dispute to arbitration. An arbitration agreement cannot therefore be recognized and enforced unless validly formed under the applicable forms generally adopted by law for the formation of any contract. To form a valid agreement, the contract must involve elements of consideration and mutual consent.

That said, international arbitration agreements ultimately attach great importance to the parties’ wishes by recording their mutual valid assent to voluntarily arbitrate. In the international commercial transaction’s context, such consent is typically established either through a corporate directors or officer’s signature executing a formal contract or evidenced in some other sort of written form providing a written record of the parties’ agreement to arbitrate. This is usually contained in an exchange of writings including electronic means of communications, or other modes by which valid consent may be impliedly-typically established often involving arbitration agreements or contracts the terms of which have been concluded orally, by conduct, or by tacit consent for the contractual validity. On the other hand, it has been argued that attaching too much importance to the parties’ wishes rather than the national legal framework within which the arbitration will be conducted might well go too far. This is because it would ultimately transmute the international arbitral process along with an appropriate set of institutional and international rules into a removed and autonomous procedure conducted far too independently of the relevant national law.

Insofar as the English internal legislation on arbitration is concerned, which is generally confined to cases where the arbitration is seated in either England or Northern Ireland (as per section 2 of the Arbitration Act 1996) the governing law is the aforementioned Arbitration Act 1996 which succeeded the former 1950, 1975 and 1979 Acts, prodded by the need to have a new Act enacted that would be ‘user-friendly’ and accessible to those already acquainted with the UNCITRAL’s Model Law on International Commercial Arbitration. The new legislation, namely the 1996 Act, was primarily built on the general principles aiming to provide parties with greater autonomy and facilitate in the fair settlement of claims by an unbiased tribunal eliminating or minimising unnecessary delay or expense. This was intended to make sure that London could retain its reputation as a leading international arbitration hub.

At the same time, in view of the scepticism prevailing in many jurisdictions with respect to arbitration agreements down to the early 20th century, there were barriers to allowing arbitration to obtain its substantive role as an effective and efficient alternative mode of resolving disputes. Hence, the position of historical disapproval and distrust of arbitration had to be overturned, in order to allow the arbitral agreements and awards enforcement process to become much easier.

That said, among the several international arbitration conventions seeking to provide a uniform enforcement mechanism for arbitration agreements, the most important and prevalent of these is the New York Convention of June 1958 on Recognition and Enforcement of Foreign Arbitral Awards (from hereafter the ‘Convention’). The 1958 ‘Convention’ was negotiated within the United Nations context and has been acceded to and ratified by well over 140 states including all 27 Union member states. This requires Contracting States to enforce international commercial agreements to arbitrate. The 1958 ‘Convention’ is mirrored in ss. 100-104 of the 1996 Arbitration Act, insofar as English internal law is concerned.

In line with the general principles governing contract validity and formation in all types of contracts, the draftsmen of the New Convention 1958 seem to move away from this historic disbelief of arbitration. Thus, they provide for the presumptive validity and obligatory recognition of international arbitration agreements with a view to persuading national courts to recognize as binding and enforce arbitral awards as readily as possible. In so doing, they impose on Contracting states the obligation to recognize international agreements to arbitrate so long as, among certain other requirements, the most universal ‘written form’ criterion laid down in its Article II (2) along with related criteria provided for in its Article II (2) for a ‘signature’ and/or ‘an exchange’ of writings, are satisfied.

Moreover, they also provide for robust enforcement mechanisms for such agreements in Article II (3) by referring the parties to arbitration whenever a court of a Contracting state is faced with a matter which the parties have agreed to arbitrate, typically subject only to a limited number of exceptions/defences on generally-applicable contract law grounds.

In the same line of thinking, subsequent legal instruments, such as the original version of the 1985 Model Law on International Commercial Arbitration, was intended to serve as an instrument of harmonization within the relevant field. The latter was deemed as one of the most successful products of the UNCITRAL and was purposefully aligned with the New York Convention to ensure the continuation of the uniformity of interpretation made by the courts on the ‘writing’ requirement.

As such, the UNCITRAL Model Law on International Commercial Arbitration has followed the same pattern as the New York Convention in confirming the ‘writing’ requirement for arbitration agreements in a provision similar to that of Article II(2) of the ‘Convention’. In particular, this provision is contained in the original wording of its Article 7(2) (discussed in more detail below), chosen by UNCITRAL for the purposes of determining the scope of the ‘writing’ requirement.

Yet, the presumptive validity or enforceability of international agreements to arbitrate do not go without exceptions including claims grounded on the alleged invalidity of the latter owing to failure to meet the written form requirement.

Overall, the aim of this study is to explore the ‘writing’ requirement of the ‘New York Convention’ relating to the formal validity of arbitration agreements and to ascertain whether or not the way in which the latter are construed at both the international and national levels is sufficient to preserve the uniformity of interpretation. In so doing, this study will also examine the different approaches made to ascertaining the proper law governing the arbitration clause.

‘International Arbitration’ Agreement Jurisdictional Requirement

First of all, it is important to ascertain the approach adopted to defining the scope of application of the ‘Convention’ to arbitral agreements, if any, as well as to arbitral awards. As discussed above, both the New York Convention and the majority of national arbitration legal systems which have adopted the UNCITRAL Model Law on International Commercial Arbitration are only applicable to ‘agreements to arbitrate’ or ‘arbitral awards’, pursuant to Articles II(1) and II(2) of the ‘Convention’ and the parallel provision of Article 7 of the Model Law.

Considering that both the New York Convention and the majority of national statutes regulating international commercial arbitration serve the purpose of aiding the arbitral process at an international level, it is unsurprising that both of them require some sort of ‘foreign’ or ‘international’ element. That said, they are both limited to international arbitration agreements, without interrupting arbitration matters in the domestic context.

Article 1(1) of the UNCITRAL Model Law on International Commercial Arbitration is illustrative of this sort of limitation where it stipulates that the Law is only applicable to ‘international commercial arbitration’.

The term ‘international’ is thereafter defined broadly by the same legal instrument in its Article 1(3) to include nearly any agreement or commercial relationship between parties from different states or conduct which has taken place in different states.

To return to the scope of application of the New York Convention, this is clearly defined by Article I(1). As per that definition, in international disputes the principal tenet is that the ‘Convention’ applies only to foreign arbitral awards rendered outside the Contracting State where recognition and enforcement of the latter are sought, including awards which are not regarded as domestic awards under the law of the recognizing State.

Unlike arbitral awards, the New York Convention does not seem to provide any parallel definition relating to those international commercial arbitration agreements to which it would be applicable.

In the absence of a definition concerning the arbitration agreements to which the ‘Convention’ might be applied, some authorities tend to apply Article I(1) analogously[1] in holding that Article II of the ‘Convention’ is only applicable to those agreements that have a ‘foreign’ connection, namely when the arbitration is seated in a State other than the State requested to enforce the agreement.

Unsurprisingly, some other authorities have rightly expanded the New York Convention more broadly to include any international commercial agreement to arbitrate, whether or not the seat of the arbitration is in the Contracting state.

Formal Validity of International Commercial Agreements to Arbitrate / The ‘Writing’ Requirement as a condition for contractual validity / Recent Developments within UNCITRAL

Having discussed the jurisdictional requirement of international arbitration agreements, we should further describe the main effects of the validity of the arbitration commercial agreement to arbitrate. Hence, if the parties have agreed to arbitration they have effectively contracted out of litigation ousting the jurisdiction of the ordinary courts of law as a method of resolving disputes, leaving the matter to the arbitral tribunal to decide. A second effect is the enforceability of the arbitral award.

As discussed above, in an international context, an arbitral award may be generally enforced in a Contracting State other than that where it was made. Thus, the 1958 New York Convention is applied. The substantive limited and specific grounds upon which the court addressed may refuse to recognize and enforce a foreign arbitral award are exhaustively enumerated in Article V of the ‘Convention’, reflected by s. 103 of the AA 1996. By Article V(1)(a) of the ‘Convention’ and s.103(2)(b) of the 1996 Act, the court addressed may refuse the recognition and enforcement of a foreign arbitral award if the award debtor, that is the party opposing the recognition and enforcement of the award, establishes that ‘ the agreement referred to in Article II is invalid under the applicable national  law which the parties have chosen to govern the validity of  that agreement or, failing any indication in this respect, under the law of the state where the arbitration is seated.’ So, both Articles II and V(1)(a) seem to make a clear reference to the arbitration agreement (discussed in detail below).

In light of the fact therefore that both the tribunal’s jurisdiction and the enforcement of the arbitral award rely heavily on the presumptive validity of the international commercial agreement to arbitrate it becomes important to determine the criteria establishing such validity before we proceed any further.

That said, pursuant to the generally-applicable law principles governing the formation and validity of other types of contracts, the perceived validity of international commercial agreements to arbitrate seems to depend on the keeping of the form requirements.

As seen above, Article II of the New York Convention requires Contracting States to recognize as binding and enforce arbitration agreements that have been entered into in writing. This requirement is thereafter specified in Article II(2) of the ‘Convention’ to include ‘an arbitral clause in either a substantive contract or a separate arbitration agreement, which may be signed by the parties and/or contained in an exchange of written communications, such as letters or telegrams’, as part of the international commerce daily life practices employed at the time.

 The agreement to arbitrate though need not necessarily be stated in an express manner that must include the term ‘arbitrate’ or its differing forms, so long as the parties’ intention to submit the dispute to arbitration can be gathered from adequate and clear expression. A common problem here is that when reading commercial arbitration agreements and looking for the arbitration clauses, they are frequently badly drafted, raising arguments about their scope and what was truly intended by them. So, drafting arbitration clauses may often be tricky. Parties will take any opportunity to proceed in national courts if they stand to gain leverage in doing so and will trade upon any alleged ambiguities in their commercial contracts. But knowing there are pitfalls may well be the first step in evading them. As such, skilful attorneys entrusted with the drafting of the arbitration clauses should make sure that the intentions of the parties are clearly stated and effectively communicated thanks to the drafting quality. In so doing, drafter’s efforts to prepare ‘perfect’ arbitration clauses should focus on one of the main strengths of arbitration, which is its flexible nature designed to fit the individual needs of the parties of each dispute. To draft the arbitration clause the right way, drafters should avoid the most common pitfalls, such as conflicting clauses or paying insufficient attention to the underlying business transaction to which it relates. They should also evade other common traps such as omitting a crucial or even a useful element from the clause such as failure to provide guidance as to the way and place of arbitration, or falling in the opposite trap which is over-specificity in providing too much or providing unrealistic expectations. In any event, the key is to avoid inattention to the underlying business transaction so that the arbitration clause can be adapted to fit the parties’ particular needs and the likely disputes that may reasonably be expected to arise. Moreover, parties should always bear in mind that there are arbitration clauses proved effective over time and working well that can be tailored to the particular business transactions parties are planning to enter without trouble.

A federal court in California [Cornejo v Spenger’s Fresh Fish Grotto, No. 09-055564, ND CA, 2010; July, 2010, Vol.4(7), p. 3(1)] has found that a properly worded agreement to arbitrate can be enforced if it’s drafted broadly enough, even if it’s an admittedly oppressive one. Parties should always make sure they have their attorney review of arbitration agreements to ensure they’re valid contracts, especially if they operate in several countries, as the requirements are likely to vary considerably and any agreement will need to be tailored accordingly. As discussed above, arbitration agreements are contracts and the generally-applicable legal requirements must be met. Accordingly, attention to detail is critical when using such agreements. As already explained, parties should have their lawyer review their arbitration agreement for every single country in which they intend to use it, as contract law varies considerably from one state to another [Curley v City of North Las Vegas, No. 12-16228, 9th Cir., 2014; HR Specialist: California Employment Law, 2015, Vol. 9(2), p.3(1)]. That said, any party wishing to arbitrate disputes should get expert legal advice to ensure that arbitration agreements are valid and enforceable [Nelsen v Legacy Partners, No. A132927, Court of Appeal of California, 5th Appellate District, 2012; Sept., 2012, Vol. 6(9), p. 3(1)].

So far as the English internal law is concerned, although the1996 Act specifically requires that all arbitration agreements are made in writing, s.5 of the 1996 Act provides an extremely broad definition of ‘agreements in writing.’

Accordingly, it is sufficient for the parties ‘if the agreement is made in writing,’ whether or not it is signed by them ( s.5(2)(a) Arbitration Act 1996), probably embracing all ordinary written contracts, even if they are not signed by the contracting parties.

In addition, under s.5(2)(b) of the Arbitration Act1996, it would also be enough for the parties ‘if the agreement was evidenced in writing’, probably including oral agreements which are, as per s.5(4), recorded by one of the parties, or, for example, by the arbitrator acting as a third party with the authority of the parties in the course of the arbitral proceedings.

Moreover, pursuant to s.5(3), where parties have orally agreed a contract by reference to terms which are in writing constitutes as between those parties an agreement in writing. For example, any reference to a written agreement incorporating the arbitration rules of the LMAA Terms, which explicitly sanction and recognize, in their paragraph 5, their implied or deemed applicability, should the parties choose to incorporate those terms in their agreement, or, alternatively, by reference to terms including a written GAFTA arbitration clause, would suffice to constitute an agreement in writing [Heifer International Inc v Christiansen [2007] EWHC 3015 (TCC), [2008] Bus LR D49, and, PEC Ltd v Asia Golden Rise Company Ltd [2014] EWHC 1583 (Comm)].

Furthermore, s5(5) of the 1996 Act reflects a wider conception of the ‘agreement in writing’ definition, which is paralleled to the first option adopted in the Article 7 UNCITRAL amendments on 7 July 2007 to the 1985 Model Law on the writing requirement (to be discussed shortly). As such, it confirms that a written agreement arises by virtue of the exchange of written submissions in arbitral or legal proceedings in which the creation of an agreement otherwise than in writing is asserted by one party against another party and not denied by the other party in his response, unless the absence of such response to the other party’s submissions was due to mere failure.

Lastly, under s.5(2)(b) an agreement made by exchange of communications in writing constitutes an agreement in writing for the purposes of the arbitration legislation. It is to be noted that under s.5(6) of the1996 Act the term ‘in writing’ or ‘reference to anything being written’ covers its being recorded ‘by any means’. As a consequence, this category would encompass new means of telecommunication commonly adopted for concluding contracts, such as exchanges by telex, agreements concluded by fax and even other modern means of communication as, for example, e-mails which are commonly used in our days for the conclusion of contracts [Zambia Steel & Building Supplies Ltd v James Clark & Eaton Ltd [1986] 2 Lloyd’s Rep 225 CA, apparently approved by the DAC by express reference to it in their report, DAC Report para 34. Also, Petredec Ltd v Tokumaru Kaium Co Ltd (The Sargasso) [1994] 1 Lloyd’s Rep 162 (CA), and, Abdullah M Fahem v Mareb Yemen Insurance Co [1997] 2 Lloyd’s Rep 738 (Comm), where Cresswell J ruled he was bound by the Zambia Steel case in finding a written contract for the purposes of the Arbitration Act 1975 that then applied].

Arguably, this seems to be in keeping with the generally ‘pro-arbitration’ provisions of pre-enforcement regimes prior to the Arbitration Act 1996 contemporary legislation, namely the Article II ‘writing requirement’ of the New York Convention, which has been interpreted by courts to be, as far as possible, compatible with the march of the technological progress, such as the revolution of e-mails (to be discussed shortly).

This said, as stipulated in para (1) of Article II of the New York Convention concerning the written form requirement on the validity of international arbitration agreements, the ‘Convention’ is only applicable to ‘agreements in writing.’

According to para (2) of Article II, however, the ‘Convention,’ as already explained, in addition to requiring a written record of the parties’ agreement to arbitrate, it also requires a contract that is either ‘signed by the parties’ or contained in ‘an exchange of writings’ that record the parties’ agreement, excluding agreements that are entered into orally or tacitly. Hence, the concept adopted 60 years ago is one of signature or exchange.

It is submitted that the condition of an ‘agreement in writing,’ as evidenced in an international commercial agreement to arbitrate, is a prerequisite for the valid nature of a contract. Hence, absent the party’s signature upon the agreement could be a strong index of the absence of the party’s assent to the arbitration agreement and thereby to the arbitration clause incorporated therein. It follows that there is no valid arbitration, when the arbitration clause is contained in an unsigned agreement.

In practice, however, the huge technological revolution since the ‘Convention’ was drawn up in 1958 has led to the adoption of a number of modern means of communication, such as telexes and faxes which then evolved into e-mails commonly used for the formation of contracts in the course of daily business between opposite ends of the world.

As it is hard to imagine that anyone could have expected at the time when the ‘Convention’ was drafted the technological developments that would subsequently occur, it is unsurprising that its draftsmen have made no express reference to electronic communication in the wording of Article II.

Still though, this gives rise to the question of whether the definition of the writing requirement contained in Article II(2) could also include agreements concluded by electronic exchanges. The answer to this question is likely to depend on the construction that the courts would give to Article II so as to cover arbitration agreements concluded by electronic exchanges.

This being the case, in construing the wording of Article II, courts would probably have to take into account the most modern technological means that existed at the time when the ‘Convention’ was drafted, namely ‘letters or telegrams’ referred to in the wording of this article. This manifests the clear intention of its draftsmen to give effect to the conclusion of agreements to arbitrate between parties that were not physically present, so long as they employed the communication means that were generally adopted in business practice for the formation of such contracts.

This can be seen in court rulings in several countries confirming that Article II of the New York Convention should be interpreted to include arbitration agreements entered into by exchanges by telex [for instance, the Swiss decisions published in Yearbook Commercial Arbitration XII (1987), 502 and XII (1996) at 681 as well as the Austrian decision published in Yearbook Commercial Arbitration (1976),183], or by fax [The UNCITRAL Secretariat note A/CN.9/WG.II/WP at 139, and the Swiss decision published in Yearbook Commercial Arbitration XXI (1996) at 685], albeit neither telexes nor faxes were mentioned in the wording of the said article of the ‘Convention.’

In light of these court decisions, it would be a reasonable assumption if courts were equally inclined to continuing construing Article II in the same way as above so as to cover the situation every time new commonly adopted means of communication were developed, as it happens now with the occurrence of the new means of electronic communication by e-mails. If courts are to subsequently construe the 1958 New York Convention as allowing agreements made by means which were still unknown at the time the ‘Convention’ was drafted, why should it surprise us to think that the same could happen with the current developments? After all, this would certainly seem to be in keeping with the spirit of the New York Convention as a whole aimed to give effect to international commercial agreements to arbitrate, so long as these agreements were entered into by means generally employed by businessmen for the formation of their contracts on their day-to-day business.

As discussed above, this argument seems to be further reinforced by the original spirit of the 1985 UNCITRAL Model Law on International Commercial Arbitration which parallels Article II(2) of the ‘Convention’ in requiring arbitration agreements to be in writing. Accordingly, Article 7(2) of the 1985 UNCITRAL Model Law originally defines the scope of the writing requirement in the following way: “An agreement is in writing if it is contained in a document signed by the parties or in an exchange of letters, telexes, telegrams or other means of telecommunications, so long as they provide a record of the agreement…”

So, as with Article II(2) of the New York Convention, Article 7(2) of the UNCITRAL  Model Law on International Commercial Arbitration requires that agreements to arbitrate be in ‘written’ form either contained in a document signed by the parties as a signed written contract or in an exchange of writings that record the agreement to arbitrate. Arguably, this would preclude oral agreements and arbitration agreements involving purely tacit consent to the other party’s written proposal of entering into an agreement to arbitrate. Hence, Article 7(2) makes it clear that contractual validity necessitates satisfying the ‘writing’ requirement. So, Article 7(2) has preserved the dual concepts of signature or exchange.

Hence, as is evidenced from the wording of this article, the draftsmen of the 1985 Model Law originally intended to permit arbitration agreements entered into using the technological developments that existed at the time this legal instrument was drafted, whilst allowing for the use of future developments in technology that record the agreement to arbitrate.

That said, the drafters of the UNCITRAL Model Law on International Commercial Arbitration did not originally wish to burden the contracting parties by excluding the use of subsequent developments that had not been invented yet at the time it was drawn up.

This liberal interpretation of the 1985 Model Law with regard to the admissibility of agreements to arbitrate concluded electronically, was also confirmed by the UNCITRAL Working Group on Arbitration when this started dealing with the writing requirement issue for international commercial agreements in a process that commenced in 1999. This process culminated in the amendments made to the 1985 Model Law on 7 July 2006 at the 39th session of the UNCITRAL, so as to dissipate any doubts as to whether arbitration agreements made electronically could be regarded as complying with the written form requirement. The 2006 revisions to the Model Law on International Commercial Arbitration were recommended by the General Assembly at UNCITRAL’s 61st session thereafter.

Hence, the 2006 amendments to the 1985 Model Law included two ‘Options’ for Article 7 on the writing requirement, which effectively diminish or eradicate the role of formal requirements for arbitration agreements.

One option retains the original structure of Article 7 in subsection (2) that ‘an arbitration shall be in writing.’ Thereafter, it makes a more liberalized approach to ‘writing’ in new subsections (3) and (4,) specifying that ‘if the content of the arbitration agreement is recorded in any form, whether or not the arbitration agreement or the contract has been concluded orally, by conduct, or by other means,’ is ‘met by an electronic communication if the information contained therein is accessible so as to be usable for subsequent reference.’ Thus, the provision under Option I would be satisfied, for example, by a written record of the arbitration agreement where one party has, in an e-mail, recorded the terms of what has been agreed even if those terms have been agreed orally or tacitly. Arguably, the effect of this option would be to materially eradicate any requirement for a signed written contract or an exchange of written submissions, requiring only a written record of the arbitration agreement.

So, under the first option the UNCITRAL Model Law is aligned with modern practice, as reflected by judicial decisions and national arbitration laws. It is unsurprising therefore that courts have found that an exchange of communications between a signatory to the contract and a non-signatory, copied to the other signatory thereafter, was an agreement in writing (Jianxi Provincial Metal and Minerals Import and Export Corporation v Sulanser Co. Ltd [1996] ADRLJ 249). By way of further example, courts have also found that an exchange of telexes between two brokerage firms in Paris purporting to arbitrate in London under the ICC Rules, with English law applicable  to the substantive contract, was sufficient to constitute a valid agreement to arbitrate (Arab African Energy Corporation Ltd v Olieprodukten Nederland BV [1983] 2 Lloyd’s Re), (albeit such forms are not generally recommended for arbitration

agreements).

By contrast, Option II is much more sweeping as it seems to make no reference to any formal requirements at all, leaving only material issues of oral or tacit consent, sufficient to constitute a valid agreement to arbitrate. So, this alternative second option goes a step further as there is no need  to say explicitly that the writing requirement is met by electronic submissions or that agreements to arbitrate concluded by conduct or by reference are allowed. On the contrary, it is sufficient to show an ‘agreement by the parties to submit to arbitration all or certain disputes.’ Yet, this alternative second option has not received full and unanimous approval by Governments as evidenced in their negative comments, with the exception of Germany.

Overall, considering that the 1985 UNCITRAL Model Law is being pursued in more than fifty states and is expansively cited elsewhere, it only appears to be reasonable to interpret the New York Convention in light of the 1985 Model Law, as they’re both associated with one another by a single line of developments, albeit the latter does not in general constitute a formal basis for construing the former.

As discussed above, Article II(2) of the New York Convention 1958 appears easily to accommodate the situation created by the advancements in technology leading to the most common modern means of electronic communication currently adopted for entering into contracts. In this respect, the 1958 ‘Convention’ matches the original wording chosen by UNCITRAL to determine the written form criterion in the 1985 Model Law and its 2006 revisions, as seen above.

This is not to say, however, that construing Article II as covering current developments in technology is a matter that lacks in controversy and needs not be clarified at all. On the contrary, given that the uniformity of interpretation made by national judges is one of the most valuable assets of the 1958 ‘Convention’, an interpretative instrument was needed capable of promoting this sort of uniform interpretation which would also be compatible with the advancements in technology. In addition, such legal instrument should be treated as one of the most effective means of deterring different courts from interpreting the 1958 ‘Convention’ inconsistently.

That said, given the New York Convention’s central aim of permitting the recognition and enforcement of foreign arbitral awards as readily as possible and the generally diverse legal approaches by different states towards the issue of the form of the arbitration agreement ( to be discussed shortly), it is unsurprising that the General Assembly adopted  the 2006 UNCITRAL ‘Recommendations’ for the interpretation of Articles II(2) and VII(1) (discussed further below) of the New York Convention’s writing requirement . This document was adopted following thorough discussions within the Working Group over the issue of how best to deal with the need to have the New York Convention clarified.

The UNCITRAL recognizes its meaningful role in achieving a consensus among the different social, legal and economic systems in both developed and developing states and promoting the progressive harmonization and unification in the field of international trade law, as recalled in its preamble. Accordingly, the UNCITRAL’s Recommendation in Article 1 reads as follows: Article II(2) should be interpreted in a non-exhaustive way, so that the circumstances described therein should not provide any exhaustive list of Article II(1)’s requirement for a formally valid agreement in writing other than just an illustration of written arbitration agreements, which could be supplemented with other types of writings, without a signature or an exchange of letters.

Hence, under this Recommendation, the exchange of letters and telegrams referred to in Article II(1) for the writing requirement should be interpreted to mean only representative examples of formally valid contracts, allowing Article II(1)’s writing requirement to be met  by agreements made by the exchange of other means of communication that do not strictly satisfy the Article II(2)’s definition.

This approach is, indeed, consistent with the approach taken by some authorities suggesting that Article II(2) does not provide an exhaustive definition of Article II(1)’s writing requirement for a formally valid agreement within the meaning of the ‘Convention.’ By contrast, other authorities seem to adopt a different position with regard to the relationship between Articles II(1) and II(2), holding that only if an international commercial agreement meets the definition under Article II(2) can it be really said to be formally valid for the purposes of the ‘Convention.’

That is not to say, of course, that the UNCITRAL’s Recommendation instrument should be treated as having any binding effect on either States or national judges and much less so to be treated as an authoritative basis for the interpretation of the New York Convention, as it can barely be viewed as the enacting or issuing body.

On the other hand, no doubt it should be seen as having the influence of a formal view from the UN body, encumbered with co-ordinating the United Nation’s legal activities in the area of international trade law, involving the primary legal and economic systems around the world. It is therefore rational to think that we should attach UNCITRAL’s position significant weight when seeking to construe the 1958 ‘Convention’.

**The Law applicable to the Validity of the Arbitration Agreement **

It will be remembered that according to Article V(1)(a) of the New York Convention 1958, which regulates the enforcement of a foreign arbitral award, the court addressed may refuse enforcement if ‘the arbitration agreement was not valid under the law to which the parties have subjected it, or failing any choice in this respect, under the law of the seat of the arbitration,’ the burden of proof resting with the respondent.

So, the most convincing construction of the wording of this article is that the validity of the agreement to arbitrate is evaluated by reference to the applicable national law which the parties have chosen to govern it, which does not necessarily entail the law governing their substantive contractual relationship, or, failing this type of express choice, under the law of the place where the arbitration was seated. Needless to say, that the latter case, namely the law of the country where the arbitral tribunal is seated, widely known as the ‘lex arbitri,’ is more likely to be used, as parties will rarely subject their arbitration agreement to any law.

From what we’ve said, a strict construction of the wording of Article V(1)(a) would lead to the application of the national law of the state where the award was made to evaluate/determine the essential validity of the arbitration agreement.

These days, however, the problem of the law governing the validity of international commercial agreements to arbitrate is more severe than ever. As such, there are currently diverging views as to whether the proper law applicable to the arbitration agreement should be the law expressly chosen by the parties to govern their substantive contract or the law of the place where arbitration is seated, either by having been impliedly chosen by them or as the law more closely connected with the arbitration agreement.

In ‘Sulamerica’ [Sulamerica CIA Nacional de Seguros SA and others v Enesa Engenharia SA and others [2013] 1 WLR 102, per Moore-Bick LJ, with whom Hallett LJ agreed] the English Court of Appeal took the view that in the absence of any indication to the contrary, there is a presumption that an express choice of the law applicable to the substantive legal relationship is an implied choice of the law governing the arbitration agreement, which can be rebutted on the facts of each individual case [this approach was also confirmed in the subsequent case of Arsanova Ltd & others v Cruz City 1 Mauritius Holdings [2012] EWHC 3702 (Comm)].

Of course, the above decision does not extend the rebuttable presumption of the applicability of the law of the matrix contract to the arbitration agreement beyond cases where there is an express choice of the law governing the substantive contract and, as such, the situation is less intricate when there is no express governing law clause. This approach has been adopted by the English courts in the Habas Sinai [Habas Sinai Ve Tibbi Gazlar Istanbul Endustrisi AS v VSC Steel Company Ltd [2013] EWHC 4071(Comm)], where Hamblem J emphasized that the importance of the choice of seat of the arbitration is likely to be ‘overwhelming’ on the ground that the law system of the place of seat will frequently be that which the arbitration is most really and closely connected with.

On the other hand, when there is an express choice of law governing the main contract, the rebuttable presumption established by the court in ‘Sulamerica,’ arguably, seems to be more controversial, giving rise to uncertainties. That said, it is doubtful whether in its ruling the English Court of Appeal has given any adequate consideration to the parties’ expectations and to the significant role that the arbitral seat arguably plays in arbitration, as its law generally governs the arbitral procedure. In addition, as the arbitration agreement is an autonomous in law and separable agreement from the primary contract which is much more intertwined with the procedure than it is with the substantive legal relationship, why parties who have expressly chosen the seat should be presumed to have chosen the law of the substance of the dispute as applicable to the arbitration clause instead of the law of the procedure which has a stronger relationship with the arbitration agreement? After all, in ‘Sulamerica’ the English Court of Appeal has itself laid greater emphasis on the law of the seat, stressing that the arbitration agreement is more closely intertwined with the procedural law than it is with the substantive law, calling the very foundation of the rebuttable presumption into question. Accordingly, there are good arguments for holding that the law of the place where arbitration is seated should prevail over the law governing the substantive rights and obligations of the parties under the main contract, insofar as the law applicable to the arbitration agreement is concerned. The approach taken by the court in ‘Sulamerica’ is only correct in the case of absence of a choice of a seat of the arbitration where the closest connection factor seems to denote the law governing the substance of the contract.

Unlike the English Court of Appeal in the ‘Sulamerica’, the above arguments were strong enough to persuade the High Court of Singapore in ‘FirstLink’ [FirstLink Investments Corp Ltd v GT Payment Pte Ltd [2014] SGHCR 12] to diverge considerably from the approach taken in the English arbitration jurisdiction, placing greater emphasis on the seat as the law governing the arbitration agreement. In this case, the High Court ruled that, when there is a choice of the law of the matrix contract and a choice of seat of the arbitration, the latter is more likely to be applicable to the arbitration clause, even if this law differs from the law of the matrix contract ( per Shaun Leong Li Shiong AR).

So, the judicial decisions discussed above illustrate that major jurisdictions which play the lead in the field of international commercial arbitration across the world may hold opposite views on the issue of the proper law applicable to the validity of the arbitration agreement. These conflicting views are also unlikely to converge in the near future at international level. It is submitted, however, that, without espousing extreme opinions purported to evaluate the validity of the agreement to arbitrate without reference to any national arbitration legislation, a more ‘transnational’ approach should be urged to reach a desirable point of international convergence.

Arguably, in the absence of any international convention directly regulating the choice-of-law rules on international commercial agreements to arbitrate, the most plausible source of appropriate choice-of-law rules in this field at an international level would appear to be those contained in Article V(1)(a) of the 1958 New York Convention. In order to treat the inconsistencies it is argued that English courts should take the first opportunity that offers itself to assert the espousal of choice-of-law rules which are congruent with the choice-of-law rules contained in Article V(1)(a), so that consistency may be forwarded at both the national and international levels.

Competition between Article II of the New York Convention and National Arbitration Laws / The assistance of the more-favourable-law provision of Article VII

To return to the writing requirement, as discussed above, the draftsmen of the UNCITRAL Model Law seem to have maintained the dual concepts of signature or exchange in Article 7(2), although there were very powerful and authoritative statements that Article 7(2)’s definition had failed to effectively confront and deal with the problem of continuing to exclude many forms of conducting international business. In this regard, some Contracting States have taken steps to include a wider definition of the writing requirement, although the range of form requirements that national arbitration laws impose on the validity of arbitration agreements may vary significantly.

That said, the majority of national legal systems lay down some sort of formal requirements similar to those of Article II(2)’s form requirement of the ‘Convention’, whilst others lay down even stricter conditions of a written form requirement, tantamount to contracts that exceed administration in the ordinary course of business, as in Article 807 of the Italian Code of Civil Procedure. Section 1031 of the 1998 German Arbitration Law considers conformity to the writing requirement. Article 1021 of the 1986 Netherlands Arbitration Act provides that the agreement to arbitrate shall be provided by an instrument in writing, but then adds emphasis on the fact that such ‘an instrument in writing is sufficient provided it is explicitly or by implication accepted by or on behalf of the other party.’ At the same time, Article 1781 of the Swiss Private International Act, while imposing the written form requirement for arbitration agreements, makes no reference to signature or exchange, unlike the 1991 Singapore International Arbitration Act Article which adheres to the dual concept of Article 7(2) of the Model Law. Simultaneously, other jurisdictions are much more liberal in reducing the role of formal criteria applicable to the arbitration clause, similar to that in Article 7(2) of the UNCITRAL Model Law on International Commercial Arbitration or Option I of its 2006 amendments, as seen above. They may even recognize an arbitration agreement without laying down any particular formal criteria at all, similar to that of Option II of the 2006 revisions to the Model Law, which reflects the latest position under some legal systems, as in the case of Article 1 of the Swedish Arbitration Act (so long as it has been agreed so by the parties). Section 3-10 of the Norwegian Arbitration Act contains a similar provision to that effect. This latest position reflected in Option II of the 2006 revisions to the Model Law, that ‘an agreement to arbitrate shall not be subject to any requirements as to its form’ is also found in Article 1507 of the French Decree 2011-48, and s.7(1) of the New Zealand Arbitration Act 1996, which provides that ‘an arbitration agreement may be made orally or in writing.’ Moreover, the English legal system has taken steps to virtually reduce the role of the written form requirement providing a very expansive definition of an agreement in writing which is considered to cover most methods of bringing into effect agreements to arbitrate, as seen above. As such, both the 1996 English and Hong Kong Statutes qualify as written international commercial agreements to arbitrate that are made otherwise than in writing by reference to terms that are in writing, or that have been recorded in writing only by one party, as seen in s.5 of the English Arbitration Act 1996.

On the other hand, notwithstanding the wording of Article V(1)(a) which, as seen above, considers the relevant national form criteria as solely applicable to evaluating the essential validity of international commercial agreements to arbitrate, judicial practice has invariably shown to give preference to the more arbitration-friendly system of Article II(2) than that offered by the provisions of national arbitration laws.

The reason why Article II(2) is judicially treated as containing the solely applicable form criteria instead of a national law is not far to seek. This reasonable assumption is based on the fact that in the early decades of its existence and for over fifty years, the 1958 ‘Convention’ has traditionally been regarded as having an international uniform rule character which is less complex and burdensome than national arbitration legislation, thereby superseding any heightened national form requirement imposed by a Contracting state.

To this end, some authorities uniformly hold that the New York Convention reflects an internationally uniform standard that prescribes a mandatory ‘maximum’ requirement, which Contracting states should not be allowed to overstep.

However, the standard of what constitutes a more arbitration-friendly system has changed over years and nowadays there are diverging views among authorities as to whether Article II(2) should represent a mandatory ‘minimum’ form requirement, which unless complied with the agreement does not come into existence and is thus ineffective. This is so, even if the arbitration agreement satisfies the minimized form criteria laid down under national legislation incorporating the 2006 revisions to Article 7 of the Model Law on International Commercial Arbitration.

As such, Article II(2) is now being increasingly questioned as prescribing a ‘minimum’ form requirement that is less favourable to enforcement. Consequently, if national arbitration legislation is to be treated as having a more arbitration-friendly character than the character of Article II(2) of the ‘Convention’, it is legitimate to inquire whether the correctness of persisting in applying Article II(2)’s formal criteria, rather than the more liberalized definitions of a ‘writing’ provided for in national arbitration laws should be discredited.

In this respect, the so-called more-favourable-law provision of Article VII of the 1958 ‘Convention’ could be the answer to problems arising from the competition between the New York Convention and national arbitration laws as regards their conflicting form criteria in relation to the validity of arbitration agreements.

According to the provisions of this article, Contracting State laws imposing less demanding formal criteria for the enforcement of awards may be applied in lieu of the requirements laid down under Article II(2) of the ‘Convention’.

To this end, the above-mentioned UNCITRAL’s ‘Recommendation’ concerning the interpretation of the writing requirement, as laid down under the New York Convention, has added an Article 2. The latter has emphasized the importance of reading Article VII(1) as permitting the applicability of Contracting State laws that contain more favourable standards for the enforcement of awards in imposing less strict form criteria than that under the ‘Convention’ (Article 2 of the Recommendation reads: ‘Recommendation also that article VII, paragraph 1, of the Convention on Recognition and Enforcement of Foreign Arbitral Awards, done in New York, 10 June 1958, should be applied to allow any interested party to avail itself of rights it may have, under the law or treaties of the country where an arbitration agreement is sought to be relied upon, to seek recognition of the validity of such an arbitration agreement.’)

As a consequence, under UNCITRAL’s second recommendation, the New York Convention would no longer be considered as laying down a ‘minimum’ form requirement, but would instead be treated as allowing State laws to adopt arbitration legislation minimizing or eliminating Article II(2)’s written form requirement, like the 2006 amendments made to the 1985 Model Law.

Still though, the UNCITRAL’s second recommendation contained in Article 2 does not resolve all problems, as it provides that Article VII offers assistance only where the less demanding form criteria are ‘allowed under the law or the treaties of the State where an arbitration agreement is sought to be relied upon.’

In practice, this would need to be the place where the award needs to be enforced. It is legitimate to inquire therefore whether or not an issue is raised if the award was made under a State law providing for a more expansive definition of an agreement in writing, but is then sought to be enforced in a jurisdiction which provides for a narrower definition. In essence, this means that Article VII can only avail if the law of the State upon which the parties may have relied at the enforcement stage, which is necessary for the validity of the arbitration agreement, is more flexible in its formal requirements.

It is often the case that parties will choose not to rest on the flexibility afforded by the liberal law of the place of enforcement, since, on the one hand, that place may vary depending on who is going to be the losing party, and, on the other hand, there could indeed be various places in which parties may have assets. Hence, resting on the law of the place of enforcement, when entering into an arbitration agreement, is unlikely to happen and it could risk the essential validity of the arbitration agreement due to unpredictability, even if that law is more favourable to enforcement.

As such, the more flexible law with the less strict form requirements upon which parties may frequently seek to rely when entering into an arbitration agreement is more likely to be the law chosen to govern the arbitration agreement, which is often the law of the place where the arbitration was conducted. In such a case, however, the provisions of Article VII would be of no assistance, not even after the UNCITRAL’s second recommendation in Article 2, unless the courts seized with the matter at the stage of enforcement were willing to construe its wording so widely that it would also include the law of the place where arbitration took place or the law that the parties have chosen to govern the agreement to arbitrate.

So, to answer this question, it is to be hoped that regard shall be had by the courts of the enforcing State to the international culture of the arbitration process respecting the fact that the parties have agreed to arbitrate under a State law providing for a wider definition of the writing requirement. But even so, arguably such a broad construction would seem to overstep the above Recommendation adopted by the UNCITRAL.

To return to Article II(2) of the New York Convention, there have been cases where a stay of court proceedings may have been refused by judges because Article II(2)’s definition of the writing requirement was not wide enough to accommodate the facts of the individual cases or not even saw their beginning because of the narrowness of the relevant definition; yet still there have been other cases in which the courts have ‘forced’/strained their interpretation of Article II(2) so as to allow the facts of the individual cases to fit its narrow scope. According to some commentators the reason why the problems identified with the narrowness of Article II(2)’s writing requirement definition do not appear to be so widespread is because more and more national courts under various State laws are increasingly appreciating the international nature of arbitration making a more international and liberal approach to the problems arising from the cases brought before them. This is likely to be another strong index of the leverage that both the New York Convention and the UNCITRAL Model Law have increasingly gained over the course of years in the field of international commercial arbitration towards harmonization.

Finally, failure to adhere to the written form requirement of Article 7(2) in an arbitration held under the UNCITRAL Model Law may be remedied by submitting to the arbitration proceedings without raising any plea for lack of jurisdiction before the submission of the statement or defence, as required by Article 16(2) of the Model Law.

Conclusion

As seen above, international jurisprudence on ascertaining the proper law applicable to the arbitration clause has revealed diametrically opposite views among leading arbitration jurisdictions, unlikely to converge any time soon at international level.

At the same time, there is a divergence of views among authorities on the actual relationship between Articles II(1) and II(2). It is not at all unusual for the form requirements relating to the validity of arbitration agreements to diversify greatly from one State to another ranging from strict conditions to none at all, found in the more progressive regulations contained in some State laws and in Option II for Article 7 on the writing requirement in the 2006 revisions to the UNCITRAL Model Law.

That said, nowadays we are confronted with the risk of diverging interpretations of the writing requirement of the 1958 ‘Convention’ that deviate from each other, so much so that the uniform rule character of the ‘Convention’ is ultimately vitiated. Even the New York Convention is under some pressure created by the need to conform to technological advancements and, in particular, the new means of electronic communication, albeit it seems to adapt itself to the situation created by the march of technological progress without trouble.

The question remains therefore of how will the New York Convention be able to work through that risk, largely depending on whether or not its formal requirements will prove more arbitration-friendly than those under some applicable State laws and whether or not its interpreter will be well-disposed towards arbitration.

In this respect, the UNCITRAL Recommendations regarding the construction of the New York Convention’s writing requirement in Articles II(2) and VII, adds its authoritative voice to endorse the appropriateness of construing Article II(2) to include international commercial arbitration agreements concluded electronically.

Such interpretation seems to have already been made in the time of old developments in technology and, as such, it would not appear to transcend the confines of the broad construction customarily and regularly adopted. Yet, extending the writing condition to cover the most modern means of communication does not automatically extinguish the need for a written form as a condition for the recognition of arbitration agreements.

This can be best seen in the adverse reactions of several Governments to the second option in the 2006 amendments to the Model Law on International Commercial Arbitration which makes no mention of formal requirements, albeit adopted as an alternative to Option I. That said, the UNCITRAL Model Law on International Commercial Arbitration goes much further than the 1958 ‘Convention’ in defining the writing requirement, and has itself been the subject matter of proposed amendments and recommendations.

As such, Contracting States adopting the 1985 UNCITRAL Model Law will be called in the future to choose between Option I, which maintains the writing requirement and makes it clear that such option may be satisfied by the exchange of electronic communications, and Option II, which makes no mention of any written form requirement. While Option I appears to be compatible with the writing requirement laid down under the New York Convention creating no problems, eliminating any formal requirements on the other hand under Option II seems to be incompatible and may give rise to problems.

This certainly does not look like a positive turn in international commercial arbitration at all that promotes the uniformity of interpretation of the writing requirement for the validity of the arbitration agreements. Hence, the enforceability of foreign arbitral awards under the New York Convention is most likely in the future to become volatile and inconsistent.

Be that as it may, it remains to be seen whether or not the UNCITRAL Recommendations can serve as an efficient instrument upon which Article II(2) may be interpreted. For the present, the extensive debate over the written form condition reveals a lack of consensus to abrogating such requirement.

 

 

 

Μελέτη του Βασίλη Αποστολόπουλου, Δικηγόρου LLM


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