International Scenarios (3) for International Sanctions: 2nd Landscape, 'Family Issues'.
- AAmstg
- Nov 8, 2024
- 4 min read
Updated: Nov 13, 2024
(published Sept 05th; updated Nov 08th, 2024)
Shall an arbitral tribunal sitting out from the EU (i.e. New York, Miami, Singapore, Dubai, London) in a dispute between two parties, which are EU Members, apply EU sanctions even if the parties have chosen the situs law to govern their agreement?
In such an outlined case, the tribunal's approach to EU sanctions would likely depend on various factors, including the nature of the dispute and the specific provisions of the situs law chosen by the parties. Here is my view on how the tribunal might approach the issue; the one they have chosen, their duty regarding a funding decision:
1. Application of the selected by the parties' situs law: As the parties have explicitly chosen the situs law to govern their agreement, the tribunal's primary obligation would be to apply the chosen law to resolve the dispute. This principle of party autonomy generally requires tribunals to respect the parties' choice of law unless there are compelling reasons not to do so.
2. Conflict of Laws Analysis: The tribunal may conduct a conflict of laws analysis to determine whether EU sanctions should be considered despite not being part of the chosen governing law. Factors such as the arbitration's situs, the parties' nationality, and the dispute's connection to EU law could influence this analysis.
3. International Public Policy: If the tribunal finds that applying EU sanctions would contravene fundamental principles of international public policy, it may choose not to enforce them, even if they are not part of the chosen governing law. However, the threshold for invoking international public policy is typically high and would require clear evidence that applying EU sanctions would seriously violate basic principles of justice.
4. Consultation with Experts: Given the complexity of EU sanctions and their potential impact on the arbitration process, the tribunal may seek guidance from legal experts or institutions specialising in EU law to understand better the sanctions' implications and compatibility with the governing law matching.
Note: while the tribunal would generally be obligated to apply the governing law chosen by the parties, it may need to consider the relevance and applicability of EU sanctions in light of the specific circumstances of the dispute. Ultimately, the tribunal's decision would ensure a fair and effective resolution of the conflict while respecting the parties' autonomy and relevant legal obligations. Because this Issue is somehow daring: extraterritorial sanctions, sovereign submission and Tribunal autonomy diminishing, thus the third issue requests an effort in clarification and some diving.
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Now, getting a more detailed analysis, a systematic approach, about applying sanctions, or not, which are not part of the Tribunal government law (or why going a snail's path in this case?) the sights point to these ideas:
1. Express Choice of Governing Law: The tribunal would first examine the parties' agreement to choose the current situs law as the governing law for their contract. This express choice reflects the parties' intention to resolve disputes according to the tribunal situs legal principles.
2. Principle of Party Autonomy: Central to international arbitration is the principle of party autonomy, which allows parties to determine the governing law of their contract. Arbitral tribunals respect this principle and typically uphold the parties' choice of law absent exceptional circumstances.
3. Extraneous Legal Provisions: while relevant to the dispute between European parties, EU sanctions may not automatically apply in an arbitration governed by a non-EU law. The tribunal would need to determine whether these sanctions fall within the scope of the situs law or are considered extraneous.
4. Conflict of Laws Analysis: The tribunal would conduct a conflict of laws analysis to ascertain any conflict between that government or situs law and the application of EU sanctions. This analysis would consider factors such as the territorial scope of the situs (non-EU) law, the nationality of the parties, and the nature of the dispute.
5. Impact on Arbitration Proceedings: The tribunal would evaluate the potential impact of applying EU sanctions on the arbitration proceedings. This implies considering whether the sanctions would hinder the tribunal's ability to render a fair and enforceable award or whether they would contravene principles of due process.
6. International Public Policy Considerations: If applying EU sanctions seriously violates international public policy principles recognised in the referring situs law governing the tribunal, and the tribunal may choose not to enforce them. However, such a decision would require clear and compelling evidence of the adverse consequences of applying the sanctions.
7. Interim Measures and Procedural Flexibility: To address immediate concerns related to EU sanctions, the tribunal may consider issuing interim measures or adopting procedural flexibility. These measures could mitigate the sanctions' impact on the arbitration process while preserving the parties' rights and interests. And, well, you know:
8. Consultation with Legal Experts: Given the complexity of EU sanctions and their potential implications, the tribunal may seek input from legal experts or institutions familiar with EU law. This consultation could provide valuable insights into the sanctions' applicability and interpretation in the context of Singaporean law.
So, by taking a detailed and systematic approach that considers the parties' choice of law, principles of party autonomy, conflict of laws analysis, impact on arbitration proceedings, international public policy considerations, procedural flexibility, and consultation with legal experts, the tribunal can navigate the issue of EU sanctions in a manner that ensures fairness and effectiveness in the arbitration process.
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The next landscape is in a side manner interconnected to the previous two ones.
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