Good Faith in International Arbitration: A Versatile Chameleon? Institute Dossier XXII

Foreword

Seven questions on the notion of good faith

Eduardo Silva Romero (based on notes prepared by Pierre Mayer)….. 9

Chapter 1

Introduction

Samantha Nataf & Wei Lee Lim….. 14

Chapter 2

Law applicable to the extension of an arbitral clause: A snake biting its own tail?

Aurélie Conrad Hari & Liliya Tseytlina….. 16

1. I.        On the need to extend and the challenge of determining the applicable law to assess extension….. 16

1. II.       Fundamentals of what an ‘extension’ is and some distinctions….. 17
2. III.      The general basis for extension and the related applicable law….. 18

A         Little to no extension: Explicit consent….. 19

B         Extension based on implied consent….. 20

1. IV.     Figuring out the relevant applicable law to rule on extension….. 23

A         The impossible equation….. 23

B         Can the recourse to universal concepts bridge the gaps?….. 25

C         Advocating for a detailed examination of the relevant applicable law and suggesting a reasoning tree….. 29

Chapter 3

The role of good faith in the determination of the scope ratione personae of the arbitration clause

Bernard Hanotiau….. 36

Chapter 4

Good faith principles in the interpretation of arbitration agreements

Gerard Meijer, Rajesh Pillai, Sarah Parker & Piotr Wilinski….. 43

1. I.        Introduction….. 43
2. II.       Arbitration and parties’ right to court….. 43
3. III.      Approaches to contractual interpretation….. 45

A         A civil law approach to interpreting contracts: Dutch law….. 45

B         A common law approach to interpreting contracts: English law….. 48

C         Interim conclusions….. 51

1. IV.     Pro-arbitration policies and the interpretation of arbitration agreements….. 51

A         Modern statutory frameworks applicable to arbitration agreements….. 52

B         Pro-enforcement mechanism….. 52

C         Validating arbitration agreements….. 53

1. V.      Approaches to the interpretation of arbitration agreements…… 55

A         The strong emphasis on good faith in Dutch law….. 55

B         ‘One-stop shop for arbitration’: enforcing arbitration agreements under English law….. 57

C         No need to imply a duty of good faith under English Law….. 59

D         Interim conclusions….. 60

1. VI.     Application of the rules of contractual interpretation to selected types of arbitration clauses…. 61

A         Pathological clauses….. 61

B         Multi-tiered dispute resolution clauses….. 66

1. VII.    Conclusion…… 69

Chapter 5

Good faith and the merits in international arbitration and the need for faith to do good

Jeffrey Waincymer…. 81

1. I.        Introduction….. 81
2. II.       Sources of good faith obligations….. 84

A         The procedural framework…. 84

B         Arbitral discretion….. 86

C         Express or implied norms or applicable law….. 87

D         Interpretation of express good faith norms in codes, case law or contracts…. 88

E          Good faith and common industry practice….. 91

F          Bad drafting and interpretation…… 92

1. III.      Iura novit curia?….. 93
   1. IV.     Arbitral method in pursuit of evidence relevant to the law on the merits….. 94
      1. V.      An outline of the sources of good faith within applicable law….. 97
      2. VI.     International instruments….. 97

A         United Nations Convention on the International Sale of Goods and other UNCITRAL instruments….. 97

1. VII.     UNIDROIT….. 98
2. VIII.    The principles of European contract law….. 100
   1. IX.     Lex mercatoria generally….. 100
   2. X.      Civil law….. 101

A         German law….. 101

B         French law….. 103

XI.     Sharia law….. 104

1. XII.     Common law….. 104

A         UK and common law…. 104

B         United States…. 105

C         Canada…. 106

1. XIII.    Other common law jurisdictions….. 107

A         The possibility of meta-analysis….. 107

B         Moral and philosophical perspectives….. 108

C         Economic perspectives….. 110

D         Historical perspectives….. 112

E          Meta-theories that have been proposed….. 113

F          Critiques of meta-theories and good faith per se….. 114

            XIV.   Is good faith more than the opposite of bad faith?….. 116

            XV.    Is it a subjective or objective concept?….. 116

            XVI.   The sub-elements that are said to apply….. 116

A         The duty of honesty….. 117

B         Fair dealing….. 118

C         Duties of cooperation….. 119

D         Loyalty….. 121

E          Fidelity to contract purpose….. 122

F          Confidentiality….. 122

G         Vigilance….. 122

H         Reasonableness….. 122

I           Abuse of rights and the impact of good faith norms on discretionary rights….. 123

J          Hardship, unfair contracts and unequal bargaining power….. 125

K         Good faith is to be distinguished from et aequo et bono decision making….. 126

1. XVII.  Can good faith norms support stand-alone claims?….. 127
2. XVIII.   The application of good faith norms to differing contract types…. 127
   1. XIX.   The application of good faith norms to differing stages of contractual activities…. 127

A         Negotiations….. 128

B         Conclusion of contract and standard terms….. 128

C         Performance and termination….. 129

D         Remedies….. 129

1. XX.    Conclusions….. 130

Chapter 6

Good faith and the merits in international arbitration:

The art of balance with the binding force of the contract

Maximin de Fontmichel….. 139

1. I.        The handling of good faith in arbitral disputes….. 141

A         Different uses of the principle of good faith….. 141

B         The greater autonomy of good faith: Formal ground for stand-alone claims….. 144

1. II.       The coordination with the binding force of the contract….. 146

A         The disruptive effect of good faith on the intangibility of the contract…… 146

B         The compass of intensity of good faith on the binding force of the contract…… 149

Chapter 7

Good faith and evidence: A counsel’s perspective

Jalal El Ahdab & Joseph Dalmasso….. 153

1. I.        Good faith in collecting and preparing evidence for the proceedings….. 155

A         Good faith as a prerequisite for the reliability of testimonies….. 155

B         Technology, good faith, and evidence…… 159

1. II.       The access to evidence during the proceedings and the right to submit evidence….. 161

A         Cooperating in good faith during the document production…… 161

B         The admissibility of evidence allows for the protection of good faith in the proceedings….. 162

1. III.      The way a tribunal can ensure compliance with good faith….. 166

A         Procedural bad faith may impact a decision on the merits….. 166

B         Costs and other sanctions may be used to safeguard the duty of good faith…. 167

C         Sanction of guerilla tactics, while possible, remains limited….. 168

1. IV.     Conclusion…… 169

Chapter 8

Good faith or bad: Why Chinese-style arbitral proceedings acquiesce in adducing evidence at or even after the hearing

Arthur Ma & Zhizhou Dai….. 174

Introduction: A conflict of views….. 174

Context: Arbitration in China….. 175

1. I.          Legal Regime….. 175
2. II.         Major arbitration institutions….. 176
3. III.        ‘Good faith’ is a permeating mandate….. 177

Adducing evidence: When is it really ‘too late’….. 179

1. I.          Judicial philosophy in courtrooms….. 180
2. II.         The function of ‘good faith’….. 181
3. III.        Characteristics of Chinese-style arbitral proceedings….. 182

Concluding remarks: Chinese version of ‘Kaplan Opening”?…. 188

Chapter 9

Good faith and investment arbitration

Laurie Achtouk-Spivak….. 192

1. I.        Good faith: A recognized general principle of law….. 192
2. A.        Definition….. 192
3. B.        Role….. 193
   1. II.       Good faith and investment treaties….. 194
   2. A.        Good faith and treaty conclusion….. 194
   3. B.        Good faith and treaty interpretation….. 195
   4. C.        Good faith and treaty performance…… 196

Conclusion….. 200