The Application Of Antitrust Law In International Commercial Arbitration

International Commercial Arbitration and Antitrust law appear to live on two distant planets, and their paths do not seem ever to have to cross each other. Arbitration is based upon private autonomy, and its purpose is to adjudicate private disputes; Antitrust law imposes limits upon the freedom of undertakings to contract while protecting their economic freedom and independence for the sake of the general interest. Yet, these two disciplines meet when a dispute arises concerning antitrust rules which must be submitted to arbitration. It is at this point that a question arises whether such a dispute can be arbitrated; if so, what is the arbitrator’s role, or what are the arbitrator’s power and duty to apply antitrust law? Once an award is rendered, what is the scope for control? This paper has endeavoured to clarify all the issues arising from the application of antitrust law in international commercial arbitration, hoping to lay a theoretical foundation of obstructing a mechanism of settling antitrust disputes by recourse to arbitration. The paper is thereby structured into six parts with an introduction and a conclusion.Chapter1has endeavoured to lay a theoretical foundation for the application of antitrust law in international commercial arbitration by focusing on clarifying the arbitrability of international antitrust disputes. For this purpose, the chapter first sees the characteristics of antitrust law from perspective of international arbitration and outlines the nature of international commercial arbitration in the light of antitrust law; secondly defines the international antitrust disputes as being international commercial disputes arising from a violation of antitrust law; thirdly by making a comparative and normative study of legislation, jurisprudences and arbitration cases relevant to arbitrating antitrust dispute, the chapter concludes that it is now settled law that arbitrators can apply antitrust rules to award damages or to ascertain that a contract is null and void for breach of antitrust law, and case laws in many jurisdiction set such rules aside in favour of a more modern criteria based on a general wider admission of the arbitrability of disputes involving antitrust rules.Chapter2has examined how arbitrators established its power to apply antitrust law while a given antitrust dispute arises in arbitration proceedings. Arbitrator’s powers to apply antitrust law are derived from two sources. Primarily they are available by the law governing the arbitrability of antitrust disputes, but they also depend on the will of the parties. As a result of divergence of national laws or judicial practices concerning arbitrability of antitrust disputes, arbitrators of a given case have to identify the law applicable to the arbitrability of international antitrust disputes. Though different solutions such as lex fori, lex arbitri and the law applicable to the arbitration agreement have been put forward, this paper argued that arbitrators should identify the applicable law by applying the teleological approach advocated by Professor Friedrich K.Juenger; the will of parties to arbitrate their antitrust disputes can be established from the valid arbitration clause. However, arbitration clause in itself can be rendered invalid as from violation of antitrust law, and the principle of independence of arbitration clause does not mean that the voidness of main contract as from violation of antitrust law will not taint the arbitration clause. Further whether the valid arbitration clause covers antitrust law questions and all matters relating to antitrust law have to be determined by arbitrators. Although the material scope of arbitration clause is almost invariably defined by reference to a relationship to contract and the non-contractual effects of antitrust law can raise the challenge of its inclusion in arbitration clause, the theory of arbitration and international arbitration practice have always been interpreting the material scope of arbitration clause by accepting that once it is certain that the parties intended the arbitration of their disputes arising upon a particular transaction, as a rule then, antitrust law questions, even in respect of actions for damages for antitrust law injury will be found to lie within the material scope of arbitration clause, unless expressly excluded by the parties from the clause.Chapter3has explored the duty and the sources thereof of the arbitrators to apply antitrust law. Arbitrators undoubtedly have a duty to apply antitrust law, and are expected to do so by the intention of the parties, the legal demanding of relevant private international law and the requirement of sustainable development of international commercial community.The duty of arbitrator to apply antitrust law can further the application of antitrust law in the arbitration, yet in the past doubts have been raised about the duties of arbitrators, with the argument that arbitration is subject to party autonomy and arbitrators should therefore not go beyond what parties want. However, if legal systems allow antitrust law matters to be arbitrated, this should come with the expectation that arbitrators will apply antitrust law. This extends to the application of antitrust law even ex officio, provided the basic principles of international commercial arbitration, such as the party autonomy, due process and right to be heard and be treated equally, have been faithfully respected.Chapter4has addressed the key issue of how arbitrators shall identify the applicable antitrust law. In international cases, where the conflict might be connected with different legal systems, triggering the application of different and sometimes even conflicting mandatory rules of antitrust law, the arbitrator has to identify the applicalble antitrust law, which in turn depends on the method of or the approach thereof. Before embarking on the discussion of the method the arbitrator should solve the problem of applicable antitrust law, the chapter has first outlined the kinds, adaptability and conflict of the antitrust laws competing to be applied in a particular antitrust case. After briefing the general approach for arbitrators to identify the applicable law and the characteristics of antitrust law with regard to its application, this chapter has argued that arbitrator should apply a "mandatory rules method" first put forward by Professor Pierre Mayer, a method different from the traditional method and focusing on the characteristics of antitrust law as mandatory rules. Then several schools on how to identify mandatory rules have been introduced for the purpose of finding a method to identify the applicable antitrust law. After that, the chapter has made a comparative and normative study of legislation, jurisprudences and arbitration cases relevant to identifying applicable antitrust law. On the basis of above analysis, the chapter ends by advocating that arbitrators should adopt the conflict of law approach put forward by GARY B. BORN to identify the applicable antitrust law and the rules for choice of applicable antitrust law can be modeled after the Article19of the1987Swiss Private International Law.Chapter5has discussed the available remedies for antitrust arbitration. This chapter has first looked at the remedies generally available under the antitrust laws which can be classified into different sorts. Following this, the remedies which can be arbitrable or can be used by arbitrators have been examined. After this, emphasis has been put on interim measures which can be used by arbitrators to maintain a status quo or rule on such behavioral undertakings as may be most appropriate during the pendency of the reference, with the focus on the conditions, criteria and choice of the body to grant interim measures. The final part of this chapter has made an analysis of the final civil remedies adopted by arbitrators in ICC cases and in the arbitral practice in the United States, particularly illustrating the situations in which the remedies such as declaration of the null and void of anticompetitive agreement, damages and injunctions are used.Chapter6has conducted an assessment of three kinds of mechanism to safeguard the application of antitrust law in international commercial arbitration from the angles of judges, antitrust authorities and arbitrators. Firstly, this chapter addressed how courts or judges can safeguard the application of antitrust law in arbitration by judicial control of arbitral awards concerning antitrust law through the public policy prism. There are three doctrinal and jurisprudential approaches which have been adopted by judges to look at the arbitral award, the maximalist, the minimalist and the balanced approach. Under the maximalist approach, national courts are required to carry out an in depth review of arbitral awards when they are challenged, or when enforcement is required. This involves a full review of the entire case and all the evidence associated with it. Courts can therefore consider in detail whether antitrust law has been applied ’correctly’. Under the minimalist approach no special treatment is given for awards raising antitrust law issues, and emphasis remains on taking the case outside of the courts, and settling it via arbitrators. The balanced approach would be preferable for both legal and policy reasons under which Courts should therefore only overturn awards where there is a fundamental breach of public policy. Secondly, the antitrust authority entrusted with the power to enforce the antirust law may wish to intervene as amicus curiae and make submissions if the protection of the public interest so requires and arbitrators should seek or allow such intervention only in those cases where either the arbitration agreement explicitly refers to this possibility or the two parties genuinely agree and urge the arbitrators to ask the authority to intervene in order to shed light on to some important antitrust law question for the correct application of the antitrust law, at the same time, in some exceptional conditions where arbitrators would act here as an ancillary vehicle that supports, reinforces and facilitates the anti-competitive conduct, the antitrust authority can indirectly interfere with arbitration proceedings or awards which it considers to be detrimental to antitrust law; thirdly, arbitrators should play a more active role to safeguard the application of antitrust law in arbitration and measures can be taken to encourage or discipline arbitrators to do so.