Most arbitration rules do not allow parties to lodge an appeal to an arbitration award in international arbitration. Thus, the selection of an appropriate arbitral tribunal and experienced arbitration counsel is critically important, as the facts and the law cannot generally be reheard. Awards can be annulled (meaning that the arbitration must be recommenced) or corrected under most rules, based mainly on procedural issues, a lack of arbitrability, a lack of jurisdiction and violations of public policy. Nevertheless, each award is usually considered final, binding, enforceable, and incapable of being appealed. The inability to appeal decisions is the core reason why arbitration proceedings tend to be swifter than legal proceedings before domestic courts.
The inability to appeal is provided for in the major institutional arbitration rules. The ICC Arbitration Rules, for example, expressly state that the parties “shall be deemed to have waived their right to any form of recourse insofar as such waiver can be validly made.”[1] The LCIA Arbitration Rules allow even less room for an appeal in international arbitration cases, as they state that “the parties also waive irrevocably their right to any form of appeal, review or recourse to any state court or other legal authority insofar as such waiver shall not be prohibited under any applicable law.”[2]
Nevertheless, there is an ongoing debate on whether appeal mechanisms should be adopted in international arbitration proceedings. Some institutions have already included some form of an appeal in their rules, for better or worse, as discussed below.
International Arbitration Rules Containing Appeal Mechanisms
One of the first sets of rules to allow appeals (albeit only on points of law) is the 1996 English Arbitration Act. Section 69 gives the parties the possibility to opt out of the mechanism, which allows a party to appeal to the national courts “on a question of law arising out of an award made in the proceedings”.[3]
The New Zealand Arbitration Act of 1996 provides for an opt-in-based possibility, allowing appeals on any question of law if the parties have agreed prior to the making of the award, if every other party gives consent after the making of the award, or with the leave of the High Court.[4] The act also defines a “question of law” as “an error of law that involves an incorrect interpretation of the applicable law” but does not include any evidential or factual questions.[5]
The rules of certain international arbitration institutions also contain the possibility of appealing international arbitration awards. For example, even though the 2021 ICDR Rules consider arbitration awards final and binding, they also allow parties to agree on the application of the ICDR Optional Appellate Arbitration Rules (“OAA Rules”). Under the OAA Rules, an appeal may be lodged on the basis of a material and prejudicial error of law or a clearly erroneous determination of fact.[6]
Other sets of rules also contain an opportunity for the parties to opt into an appeal mechanism. Examples include the rules of the International Institute for Conflict Prevention and Resolution (“CPR”) and those of Judicial Arbitration and Mediation Services (“JAMS”), while under the rules of the European Court of Arbitration (“ECA”) the parties are deemed to have accepted the possibility of appeal unless they explicitly excluded it in the arbitration agreement.[7]
Other sectoral rules, like the Rules of Arbitration of the Grain and Feed Trade Association (“GAFTA”), also contain a right of appeal.[8] When an appeal is lodged by any of the parties, a board of appeal is elected and constituted in accordance with the GAFTA Rules and Regulations. In the case of an award made by a sole arbitrator, the board consists of three members. If the award was made by a three-member arbitral tribunal then five members constitute the board of appeal.[9] During the appeal procedure, the board may grant an oral hearing at the request of either party. In the absence of the parties’ express agreement on legal representation, they may only be represented by an employee, a GAFTA Qualified Arbitrator or other representative, but not by any solicitor, barrister or other legally qualified advocate.[10]
As their name suggests, the Rules of Arbitration and Appeal of the Federation of Oils, Seeds and Fats Associations (“FOSFA”) similarly allow for appeals in international arbitration cases.
Arguments for and Against Appeals in International Arbitration
Should other institutions follow suit and allow arbitration awards to be appealed? There is abundant literature summarizing the pros and cons regarding the possibility of an appeal in international arbitration.
The most-cited arguments in favour include the following:[11]
- Party autonomy;
- Possibility of error correction;
- Promotion of fairness;
- Accountability of arbitrators;
- Efficiency – improving the enforceability of awards;
- Development of commercial law; and
- Development of precedent.
Those against the concept usually refer to the following arguments:[12]
- Incompatibility with the UNCITRAL Model Law, the New York Convention and international trends;
- Finality of the award;
- Cost and efficiency;
- Privacy and confidentiality; and
- Undermining the “service element” of arbitration.
Allowing appeals in international arbitration can therefore be described as a double-edged sword. As detailed in the section below, the views of practitioners also diverge on the issue.
Views of Practitioners on the Possibility of an Appeal
In a yearly survey with arbitrators, corporate counsel, external lawyers, academics and others as respondents, 25% of practitioners said that the right of appeal under Section 69 of the UK Arbitration Act should be abolished. 41% agree with the right of appeal as it currently is included in the act, while 26% agree with it in principle but would limit its application to issues of public importance.[13]
From a more general survey previously conducted regarding the possibility of an appeal in international arbitration, it can also be deduced that, according to 71% of respondents, a right of appeal would make international arbitration less attractive. At the same time, the increased costs and length of the proceedings were also mentioned as negative consequences. On the other hand, 51% of respondents stated that the lack of an appeal mechanism could be unacceptable in cases where an incorrect decision has serious consequences, while 47% think that appeals to national courts may aid the development of the law.[14]
The debate is, therefore, far from settled. We will see in the future whether during the reforms of their rules, other institutions consider adopting an appeal mechanism. Until then, we can only draw conclusions from the surveys and the cases of the institutions mentioned above, while noting that including an appeal mechanism would increase the time and costs of international arbitration, rendering it even less accessible than it is in its present form.
[1] 2021 ICC Arbitration Rules, Article 35.6.
[2] 2020 LCIA Arbitration Rules, Article 26.8.
[3] 1996 UK Arbitration Act, Section 69.1.
[4] 1996 New Zealand Arbitration Act, Schedule 2 (Additional optional rules applying to arbitration), Section 5.1.
[5] 1996 New Zealand Arbitration Act, Schedule 2 (Additional optional rules applying to arbitration), Section 5.10.
[6] AAA-ICDR Optional Appellate Arbitration Rules.
[7] N. Zamir and P. Segal, Appeal in International Arbitration – an efficient and affordable arbitral appeal mechanism, 2019(35) Arbitration International, pp. 88-89.
[8] GAFTA Arbitration Rules No. 125, Section 10.
[9] GAFTA Arbitration Rules No. 125, Section 11.
[10] GAFTA Arbitration Rules No. 125, Section 12.
[11] R. Thirgood, Appeals in Arbitration: ‘To Be or Not to Be’, 87(3) The International Journal of Arbitration, Mediation and Dispute Management.
[12] R. Thirgood, Appeals in Arbitration: ‘To Be or Not to Be’, 87(3) The International Journal of Arbitration, Mediation and Dispute Management.
[13] BCLP Annual Arbitration Survey 2022, The reform of the Arbitration Act 1996, Evolution in a changing world.
[14] BCLP Annual Arbitration Survey 2020, A right of appeal in International Arbitration, A second bite of the cherry: Sweet or Sour?