Author: Julio César Rivera Jr.*
Published: September 2019
Description:
This article explores the consequences of alleged erroneous application of the law in annulment actions in the U.S. and Argentina. The choice of these two jurisdictions is not arbitrary. The U.S. has yet to modernize its arbitration law, and so the grounds for annulment provided for in the Federal Arbitration Act do not mirror those of the UNCITRAL Model Law. Argentina had for many years one of the oldest arbitration regulations in Latin America with very idiosyncratic grounds for annulment. The enactment of a new International Commercial Arbitration Act in July 2018 based on the UNCITRAL Model Law has limited the scope of those idiosyncratic grounds for annulment to domestic arbitration. However, it remains to be seen whether the Argentine courts’ interpretation of the old annulment grounds will influence their future interpretations of the UNCITRAL-based grounds for annulment.
In this article, I analyze how those non-UNCITRAL grounds for annulment have been interpreted by U.S. and Argentine courts and the risks that these interpretations present for parties who attempt to arbitrate their disputes in the U.S. and Argentina. First, in section II, I explain why the prohibition to review the merits of the award is considered an essential principle of international commercial arbitration. Sections III and IV address how this prohibition to review the merits of the award has been acknowledged in the U.S. and in Argentina. I focus particularly on the manifest disregard of the law doctrine developed by U.S. courts, and the arbitrariness doctrine used by some Argentine courts. I evaluate to what extent these doctrines allow for a review of the merits of the award. In Section V, I argue that the application of these doctrines in the review of arbitral awards is problematic, may affect the attractiveness of both countries as a seat of arbitration and should be abandoned. Finally, in section VI, I will compare the doctrines of manifest disregard of the law and the arbitrariness with certain annulment grounds set forth in the UNCITRAL Model Law to show that some of the concerns that gave rise to both doctrines may still be addressed under the annulment grounds set forth in the UNCITRAL Model Law, without allowing a review of the merits of awards to the same extent these doctrines in the U.S. and Argentina do.
*Professor at the Universidad de San Andrés (Buenos Aires) and Global Adjunct Professor of Law (NYU School of Law), J.D. (Universidad Católica Argentina), LL.M. (Harvard Law School), Ph.D. in Law (Universidad de Buenos Aires). Many thanks to Alejandro Garro for commenting on an earlier version of this Article.