Arbitral Precedent: Dream, Necessity Or Excuse?

Arbitral Precedent: Dream, Necessity or Excuse? The 2006 Freshfields Lecture Arbitral Precedent: Dream, Necessity or Excuse? by GABRIELLE KAUFMANN-KOHLER* ArbitrationArbitration International, 2007 William W. International ParkVolume 23 Issue 3 Article ABSTRACT This article has been adapted from the Freshfields lecture given on 14 November 2006. I I. INTRODUCTION ARBITRAL PRECEDENT: what a topic, given that it is common knowledge that international arbitration lacks a doctrine of precedent, at least as it is formulated in the common-law system.1 Regardless, arbitrators increasingly appear to refer to, discuss and rely on earlier cases.2 What motivates arbitrators to refer to earlier cases? Do they merely seek some guidance, an excuse or mask for the deficiencies in their own reasoning, an opportunity to contradict an esteemed colleague, or a chance to give lessons to the arbitration community? Alternatively, do they apply a de facto doctrine of precedent out of a sense of obligation? This lecture explores these questions. * 1 2 Professor of Law, University of Geneva. The author thanks Aurélia Antonietti of Schellenberg Wittmer and the arbitration research team of Geneva University Law School, financed by the Swiss National Research Fund and comprised of Thomas Schultz, James Fry, Victor Bonnin, Caroline Kleiner and Mehmet Toral, for their assistance in researching the topic and finalising the footnotes. See e.g. Catherine A. Rogers, ‘Context and Institutional Structure in Attorney Regulation: Constructing an Enforcement Regime for International Arbitration’ in (2003) 39 Stan. J Int’l L 1 at p. 37 n. 198; Andrea Kupfer Schneider, ‘Getting Along: the Evolution of Dispute Resolution Regimes in International Trade Organizations’ in (1999) 20 Mich. J Int’l L 697 at p. 710 n. 41; Clyde C. Pearce and Jack Coe, ‘Arbitration under NAFTA Chapter Eleven: Some Pragmatic Reflections upon the First Case Filed Against Mexico’ in (2000) 23 Hastings Int’l and Comp. L Rev. 311 at p. 340 n. 99; Julia Ferguson, ‘California’s MTBE Contaminated Water: an Illustration of the Need for an Environmental Interpretive Note on Article 1110 of NAFTA’ in (2000) 11 Colo. J Int’l Envt’l L and Pol’y 499 at p. 505. The exponential growth of citations to other cases in investment awards since 2001 is well demonstrated in a study that appeared after the delivery of this lecture by Jeffery P. Commission, ‘Precedent in Investment Treaty Arbitration: the Empirical Backing’ in Transnational Dispute Management, 28 March 2007, at p. 6. ARBITRATION INTERNATIONAL, Vol. 23, No. 3 © LCIA, 2007 357 358 Arbitration International, Volume 23 Issue 3 This lecture is divided into three main parts, in addition to this brief introduction and an equally brief conclusion. Following this introduction, Part II discusses some terminology and the role of precedent. Part III evaluates current practice in an effort to establish what arbitrators do. Part IV suggests reasons for why they do it. II II. TERMINOLOGY AND THE ROLE OF PRECEDENT IN DIFFERENT LEGAL SYSTEMS Before discussing current practice, it may be useful to explain key terminology and the role of precedent in national and international legal systems. a (a) Terminology The term ‘precedent’ is used in this lecture to refer to a binding precedent under the doctrine of stare deci