EC COMPETITION LAW IN INTERNATIONAL ARBITRATION

[2005] EBLR 169

The Role of EC Competition Law in International Arbitration:

A Plaidoyer

GORDON BLANKE*
The present article discusses the increasingly prominent role played by EC competition law in the field of international arbitration. In light of this development, it is
argued that the international arbitrator has gradually become subject to an implicit
obligation to consider competition law issues ex propiu motu, irrespective even of
the lex contractus. This development is to be welcomed, especially in the wake of the
recent modernisation of EC competition law and the drive for further integration of
business communities across the world in the age of globalization.

Introduction
The role of competition law in international arbitration has been controversial for
a while, yet the controversy gradually seems to be settling in favour of the international arbitrators application of competition law of his own motion. Whereas in
light of the traditional approach to arbitration, this development arguably seems
surprising, the forces of globalisation would not allow otherwise.
Arbitration is [thus] viewed more and more as a factor of peaceful development
of international trade. States, far from showing a lack of interest in arbitral
proceedings having a seat in their territory, maintain a measure of control as
regards the respect of such fundamental principles as the arbitrators impartiality, due process and conformity of the award with their public policy, sanctioning their violation by the annulment of the award or refusal of its recognition
and enforcement.1
In view of the importance of antitrust law to transnational business relations, this
development marks tremendous progress towards the further integration of business
communities world-wide.

* SJ Berwin, London. The author would like to thank Tim Taylor, Head of International Arbitration,
for valuable comments on the present article. The author also wishes to thank David Goldberg, Co-Head
of International Arbitration, for comments on an earlier version of the article. The usual disclaimer
applies.
1 P. Bernardini, The Role of the International Arbitrator, 20(2) Arb Int (2004), pp 113-122, at p
116. Original footnotes omitted.

169

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GORDON BLANKE

In the narrower context of the internal market, international arbitrators have also
been tempted to venture forth into terra incognita and hazard the implementation of
EC competition rules in international commercial disputes. Following the European
Commissions initial scepticism, these attempts have now received the European
policy initiators albeit tempered support.2 During the past few years, the Commission has thus increasingly used arbitration clauses for the control of commitments in the context of merger control cases.3 Furthermore, in the UIP case, which
involved a joint distribution agreement as between three US distributors in Europe,
the Commission even obliged the contracting parties to incorporate an arbitration
clause regarding disputes in relation to product allocation with exhibitors.4 Also the
European judiciary has come full circle and given its approval to the arbitrability of
competition law issues.5 Further, even though arbitrators do not have direct access
to the ECJs reference procedure under Article 234 EC, the possibility of indirect
preliminary references through the national courts has at least proven sufficient for
arbitrators to ensure the effective application of EC competition law.6
What is more, in the wake of the recent modernization of EC competition law,
the procedural decentralization of the antitrust rules and the resulting self-assessment
of private companies under Article 81(3)7 might well spur a more pronounced use
of arbitration at the national level to avoid unnecessarily inflexible and drawn-out
costly court proceedings.8 In a way, arbitration agreements with their innate flexibility to accommodate the diverse legal-cultural backgrounds of the contracting
parties appear to be the ideal mechanism to give credence to the maxim of unity
in diversity within the framework of EC contractual relationships, especially in the

See the literature on modernization and international arbitration referred to throughout the present

article.
3

See in particular see LG Radicati di Brozolo Antitrust: A Paradigm of the Relations between
Mandatory Rules and Arbitration A Fresh Look at the Second Look, Int Arb L Rev (2004), at pp
34 et seq, as well as M Blessing, Arbitrating Antitrust and Merger Control Issues (Zurich 2003).
4 OJ L226/25 (1989) (Commn). To this effect, see also M Waelbroeck in C-D Ehlermann and I
Atanasiu (eds), European Competition Law Annual 2001: Effective Private Enforcement of EC Antitrust
Law (Oxford Portland 2003), at p 423.
5 See below.
6 The literature on the arbitrators lack of direct access to the ECJ is vast, but see in particular AP
Komninos, Assistance to Arbitral Tribunals in the Application of EC Competition Law in C-D Ehlermann and I Atanasiu (eds), op cit, pp 363-385.
7 See in particular the so-called Modernisation Regulation, Council Regulation (EC) No 1/2003
of 16 Dec 2002 on the implementation of the rules on competition laid down in Arts 81 and 82 of the
Treaty, OJ L 1, 04 Jan 2003, pp 1-25.
8 C-D Ehlermann goes even further when suggesting that in future, the [European] Commission
will have to take a more positive stand towards arbitration, as this is a pre-condition for the success of
the modernisation exercise. See C-D Ehlermann and I Atanasiu (eds), op cit, at p 303. For a further
confirmation of this view, see L Idot, ibid, at p 285. Note also in this context that even prior to modernization, J Temple Lang, then Director-General of Competition of the European Commission, encouraged
the use of arbitration in EC competition cases. See J Temple Lang, ibid, at pp 421-2. For a contrary
view, however, see di Brozolo, op cit, at p 33.

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immediate aftermath of Eastern European enlargement.9 Last but not least, the quasi
privatization of judicial decision-making underlying the arbitral process will arguably serve well the principle of subsidiarity, which, in a wider sense, aims to bring
core functions of classic nation-state governance closer to the citizen.
As a corollary of this development, the international arbitrator has experienced
an increase in the autonomy he enjoys in arbitrating international disputes, thus
curtailing the net effect of the sacrosanct principle of party autonomy underlying
the classical arbitral process. In the words of Bernardini,
[a]s a matter of practice , the measure of autonomy enjoyed by the international
arbitrator derives from the particular mission entrusted to him or her, which is
to resolve the dispute between the parties in their interest, but also in the interest of the community of [S]tates. The latter [] have overcome their historic
mistrust of arbitration, viewed as a derogation from the natural jurisdiction of
their courts, to consider that it represents an important factor of stability and
development in transnational economic relations. This implies that [S]tates
expect that these functions and this role be exercised in a manner which is
respectful of basic notions of justice and of [S]tates public policy and that the
international arbitrator does not become an instrument for the violations of rules
and principles considered essential by the plurality of [S]tates. The liberalisation
of the rules governing arbitration allowed by [S]tates with a view to the harmonious and orderly development of international trade cannot be interpreted as an
absence of rules and limits for all actors in the arbitral process, as the arbitrator
bears the task and duty of ensuring respect for such rules and limits.10
Against this background, the concept of public policy or its French counterpart of
ordre public has become the benchmark of the arbitrability of issues underlying
international commercial disputes and of competition law more specifically.

Ordre Public as a Benchmark of the Arbitrability of Competition Law

To put it mildly, public policy is a concept truly bedeviled. There appear to be
as many meanings to this concept as there are contexts in which it is applied. 11 In

9 On the potential of arbitration agreements along similar lines, see F Nariman, East Meets West:
Tradition, Globalisation and the Future of Arbitration, 20(2) Arb Int (2004), pp 123-137, at pp 134-5,
where Nariman observes that cultural diversity persists and it is also reflected in arbitration rules and
arbitration agreements, latter of which can be and sometimes are sui generis (Italics in the original).
10 P Bernardini, op cit, at pp 116-7. Original footnotes omitted.
11 This is hardly the place to analyze the various meanings of public policy in its different national
and international contexts. For a detailed and differentiated analysis, see N Shelkoplyas, The Application
of EC Law in Arbitration Proceedings (Europa Law Publishing Amsterdam 2003).

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the more specific context of arbitration, suffice it to say that the public policy concept has gained currency under the label of the so-called mandatory rules or to
borrow again from the French, lois de police ie rules, which formulate public
law provisions [] allowing for no derogation. 12,13 In the words of Hochstrasser,
who suggests a more detailed definition of the concept within the context of international arbitration,
[m]andatory rules of law (lois de police in French) are defined as imperative
provisions of law which must be applied to an international relationship irrespective of the law that governs that relationship; they are a matter of public
policy (ordre public) and, moreover, reflect a public policy so commanding that
they must be applied even if the general body of law to which they belong is
not competent by application of the relevant conflicts-of-law rule.14
It is this meaning of the concept of public policy more specifically that, in the
aftermath of the famous American Mitsubishi decision of 1985,15 has evolved as
a tool to control the arbitrability of competition law issues in both national and
international arbitration.16
By way of reminder, the Mitsubishi case involved a dispute between Soler, a US
car dealer, and Mitsubishi, the well-known Japanese car manufacturer. Mitsubishi
asserted certain contract claims against Soler, which, in its turn, reacted with a number of counterclaims, including an antitrust claim under the Sherman Act. In reliance
on a Japanese arbitration clause in the parties sales agreement, Mitsubishi sought
arbitration of the entire dispute. On appeal, the US Supreme Court finally ruled that
the original claim under the Sherman Act was properly subject to arbitration.17
In the wake of the US Supreme Courts approach in Mitsubishi, the European
judiciary, notably in France18 and Switzerland,19 followed suit and recognized the
12

Ibid, p 11.
For an in-depth analysis, see ibid, pp 281-2.
14 D Hochstrasser, Choice of Law and Foreign Mandatory Rules in International Arbitration,
18(5) J Int Arb (2001), pp 57-86, at pp 67-8.
15 Mitsubishi Motors Corp v Soler Chrysler-Plymouth, Inc, 473 US 614 (1985).
16 On the concept of public policy as a tool for national courts to control the arbitrability of competition law issues, see di Brozolo, op cit, pp 23-37, at pp 25 et seq. As di Brozolo states at p 28, [p]ublic
policy, whose purpose is precisely to enable States to protect their most basic policies and interests, is a
perfectly adequate tool to prevent the gross violations of the basic principles of competition law, which
are the only unacceptable ones.
17 For a more detailed analysis of the case and its significance for the arbitrability of antitrust issues,
see JR Atwood, The Arbitration of International Antitrust Disputes: A Status Report and Suggestions in
BE Hawk (ed), International Antitrust Law & Policy, Fordham Corporate Law Institute (Juris Publishing
Inc New York 1993) pp 367-401, at pp 375 et seq.
18 See eg Mors/Labinal, CA Paris, 19 May 1993; [1993] Rev arb 645; Velcros, CA Paris, 19 May
1993; [1994] Rev arb 164; and C Cass, 5 Jan 1999, Europe, Jan 2000, comm No 29.
19 Tribunal fdral suisse, 28 Apr 1992; [1992] ASA Bull 368. Note for a decision on identical lines
13

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[2005] EBLR 173

arbitrability of competition issue; provided they met the relevant criteria of national
or international public policy laid down as a benchmark by the national judges.20
In a recent decision, the Swiss Tribunal Fdral confirmed the arbitrability of
competition law issues, even though stopping short of imposing an obligation on
the arbitrator to raise competition law issues ex officio.21 In contradistinction to the
Swiss courts, the French Cour dAppel seems to have taken a more liberal approach,
allowing the arbitrator to draw the civil consequences from behaviour deemed to be
unlawful in light of rules of public policy directly applicable to the relationship of
the parties concerned, even ex officio, provided that such action did not fall outside
the specific ambit of his mission.22 And last but not least, lo and behold, even the
Swedes despite their initial scepticism23 have now come full circle in the recent
case of Dirland v Viking.24 In this case, the Court of Appeal for Western Sweden
held that the fact that an arbitrator had settled a dispute without observing legislative
provisions, which are mandatory with regard to a third party or more generally the
public interest, means that the arbitral award might contravene relevant principles
of ordre public. According to the Court, the relevant legislation designed to protect
the ordre public could even apply to disputes raising issues of EU law, including
in the present case the relevant EU telecoms legislation. However, given the nonapplicability of that legislation to relations between individuals (ie a Directive and a
Decision by the European Council, neither of which are capable of direct horizontal
effect), no additional obligations were created for Viking as a result of EU law. On
this basis, the Swedish Court of Appeal dismissed Dirlands appeal.

the Court of Appeal of Bologna, 21 Dec 1991, Yearbook of Commercial Arbitration (1993), p 422.
20 On the applicability of the notion of international public policy in Swiss and French proceedings,
see also P Pinsolle, Private Enforcement of European Community Competition Rules by Arbitrators,
Int Arb L Rev (2004), pp 20 et seq. In light of Switzerlands former aspirations of remaining a neutral
international forum granting a maximum of procedural freedom to arbitral proceedings, the Swiss example
is especially instructive: see in particular C Baudenbacher, Enforcement of EC and EEA Competition
Rules By Arbitration Tribunals Inside and Outside the EU in C-D Ehlermann and I Atanasiu (eds), op
cit, pp 341 361.
21 Tribunal fdral suisse, 13 Nov 1998. [1999] ASA Bull 529 and 455, where the Court stated:
One cannot require the arbitrator to be aware of or systematically search for the mandatory rules of
law (such as Art 85 EC for example) in each of the legislations showing signs of significant points of
contact with the relationship in the dispute. Note also that in the same decision the Tribunal ruled that
EU antitrust law was not part of Swiss international public policy.
22 Aplix, CA Paris, 13 Oct 1993; [1994] Rev arb 164.
23 See L Heuman, Arbitration Law of Sweden: Practice and Procedure (Juris Publishing Inc New
York 2003).
24 Decision T 4366-02 of the Court of Appeal for Western Sweden of 29 Dec 2003, Dirland Tlcom
SA v Viking Telecom AB (publ).

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The ECJs Seminal Ruling in Eco Swiss

Against this background,25 it has widely been argued that competition law indeed
boasts mandatory features and therefore falls within the ambit of public policy.26 In
support of this view, the ECJ finally confirmed in its by now legendary judgment in
Eco Swiss that EC competition law forms an integral part of public policy:
[] according to Article 3(g) of the EC Treaty (now after amendment, Article 3
(1) (g) EC), Article 85 of the Treaty constitutes a fundamental provision which
is essential for the accomplishment of the tasks entrusted to the Community
and, in particular, for the functioning of the internal market. The importance of
such a provision led the framers of the Treaty to provide expressly, in Article
85 (2) of the Treaty that any agreements or decisions prohibited pursuant to
that article are to be automatically void [T]he provisions of Article 85 of
the Treaty may be regarded as a matter of public policy within the meaning of
the New York Convention.27
Therefore, the ECJ held that:
[] where its domestic rules of procedure require a national court to grant an
application for annulment of an arbitration award where such an arbitration is
founded on a failure to observe national rules of public policy, it must also grant
such an application where it is founded on a failure to comply with the prohibition laid down in Article 81(1) EC [] [Therefore,] a national court to which
application is made for annulment of an arbitration award must grant that application if it considers that the award in question is, in fact, contrary to Article 81
EC, where its domestic rules of procedure require it to grant an application for
annulment founded on failure to observe national rules of public policy.28
25 It is interesting to note in this context that there do not seem to be any published English awards
discussing the issue of competition law within the framework of the public policy exception. Two reasons
for this seeming anomaly impose themselves: (i) First and foremost, in the English context, competition law issues most commonly arise with regard to a particular set of commercial agreements (such
as distribution agreements) which normally provide for ad hoc rather than institutionalized arbitration
(as a result of which such awards do not get published). (ii) Secondly, all attempts at running regular
English arbitration reports have been frustrated in the past, so that unlike eg Switzerland, France and
Germany England does not have an official arbitration publication containing updates on most recent
institutional arbitral awards.
26 For a comprehensive overview on the relevant academic contributions to the topic, see D Hochstrasser, op cit.
27 Note in this context that the New York Convention is considered the most successful convention
on international arbitration in history, having been signed by more than 160 countries world-wide, including the EC Member States. With regard to public policy more specifically, the Convention provides that
the courts of the member states can refuse the enforcement of arbitral awards on public policy grounds
(Authors footnote).
28 Case C-126/97, Eco Swiss China Time Ltd and Benetton International NV, 1 June 1999. Likewise,

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[2005] EBLR 175

Implications of the ECJs Ruling in Eco Swiss and the Arbitrators Implicit
Ex Officio Duty to Apply EC Competition Law
It could be argued in the context of this ruling that even though the ECJ did not
explicitly impose a duty on the arbitrator to raise sua sponte the potential infringement of EC competition law, the net effect of the judgment was nonetheless that an
arbitrators award could turn out unenforceable if he failed to give due consideration
to the potential competition issues at the moment of making the award. In other
words, given the arbitrators traditional duty to render an enforceable award,29 he
would run the insurmountable risk of the unenforceability of his award if he ignores
relevant competition law issues in the making of the award.30 Thus, in the aftermath
of Eco Swiss, it seems fair to say that the international arbitrator has come under
an implicit obligation to attend, of his own accord, to relevant competition issues to
the extent necessary to guarantee the effectiveness and enforceability of his award.
This interpretation of the Courts ruling has received support from a leading commentator in the following terms:
In practice, [the Courts approach in Eco Swiss] means that the arbitrator is
obliged to apply Community law, even ex officio, in cases in which the award
may be executed on Community territory. Indeed, the arbitrator risks having his
award nullified if he does not apply Community law. The award can be set aside
in the country in which it has been handed down. Providing he belongs to one
of the EC Member States, the national judge will regard the non-application of
the EC Treaty in line with the Eco Swiss case law as a breach of a public
policy rule.31

according to J Temple Lang, there remains no doubt about the mandatory nature of the EC antitrust rules:
As for public policy considerations, Articles 85 and 86 are part of our Constitution. Theyre not merely
public law, but they have constitutional importance, being provisions of the basic European Community
Treaty. See J Temple Lang in C-D Ehlermann and I Atanasiu (eds), op cit, at p 420.
29 See eg Art 35 of the ICC Rules of Arbitration, which stipulates that [t]he Arbitral Tribunal shall
make every effort to make sure that the award is enforceable at law.
30 This also seems the underlying reasoning of L Idot, when she states that in acknowledging the
national judge must penalise an arbitral award for failure to observe public policy when questions of
European Community Competition law have not been examined, the Court of Justice answers in the
affirmative the question as to whether the duty to apply ex officio European Community Competition
rules falls on arbitrators, even in the hypothesis where the parties have not raised the problem. It is in
this sense that a majority of the legal doctrine has stated its opinion and, in reality, it seems that arbitral
practices are tending towards this way of reasoning. See Case note on Eco Swiss by L Idot, [1999]
Rev arb 642. See in this context also P Pinsolle, op cit, pp 14-22, at p 18, where he interprets the ECJs
ruling by analogy to its approach in Case nos C-430/93 and C-431/93, Van Schijndel and Van Veen, 14
Dec 1995. In this case, drawing upon Art 10 of the EC Treaty, the ECJ imposed on the judges of the
Member States an obligation to raise of their own motion the issue of the infringement of EC competition
law, provided there was no need to go beyond the scope of the dispute as circumscribed by the facts.
31 See L Idot, op cit, pp 314-5.

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The importance of the effectiveness of the award also appears to be taken into
account in arbitral practice, as illustrated by an ICC award of 1982, in which the
sitting arbitral tribunal clarified that
[] [it] will, however, make every effort to make sure that the award is enforceable at law. To this end, it will assure itself that the solution it adopts is compatible with international public policy, in particular, in France [the country where
the award was to be enforced].32

The Arbitrators Duty to Apply EC Competition Law on the Basis of the

Lex Contractus
A fortiori, if the arbitrator refuses to consider competition law matters expressly
brought to his attention, it is likely for the resulting arbitral award to be set aside on
the basis of failure by the arbitrator to deal with all relevant issues presented to him
or for insufficient reasoning.33 Likewise, by virtue of the direct applicability of provisions of EC competition law throughout the legal systems of the Member States,
an arbitrator would arguably be obliged to apply EC competition law ex officio
where the lex contractus coincides with the law of one of the EU Member States.34
This view seems to receive support from the ECJs ruling in Nordsee, where the
Court held that Community law must be observed in its entirety throughout the territory of all the Member States; parties to a contract are not, therefore, free to create
exceptions to it.35 Very tellingly in this context, the Austrian Supreme Court held
in Radenska v Kajo that the prevalence of EC law over national law implied that
Articles 81 and 82, as fundamental principles of the Union, form part of the ordre
public of the Member States.36
In actual practice, arbitration tribunals appear to have followed the logic of the
direct applicability of EC competition law where the lex contractus was the law of
one of the Member States. Thus, in an ICC case of 1992, a Paris-based arbitration
panel, which was invoked as a result of a Belgian arbitration clause contained in a
joint venture agreement, held that [i]n view of the public policy character of Article
85, [it] does have to examine ex officio whether Article [] of the agreement is not

32

ICC interim award of 23 Sept 1982, Yearbook of Commercial Arbitration IX (1984), p 134.
HHP Lugard, E.C. Competition Law and Arbitration: Opposing Principles?, 5 ECLR (1998), pp
295-301, at p 297.
34 Ibid. For a confirmation of the accuracy of this view, see also C Baudenbacher, op cit, p 345, and
L Idot, Arbitration and the Reform of Regulation 17/62 in C-D Ehlermann and I Atanasiu (eds), op
cit, pp 307-321, at p 313. See also L Idot on Eco Swiss, text accompanying n 31 of the present article.
35 Case 102/81 Nordsee Deutsche Hochseefischerei GmbH v Reederei Mond Hochseefischerei Nordstern AG & Co KG [1982] ECR 1095 para 14.
36 See C Baudenbacher, op cit, p 354.
33

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caught by the prohibition of restrictive agreements.37 Likewise, a subsequent ICC

award of 1995 clearly stated that [i]l incombe en effet aux arbitres de soulever
mme doffice, mais avec toute la prudence requise, lincompatibilit dun accord
qui leur est soumis (ou de certaines de ses clauses) avec larticle 85 du Trait de
Rome.38

The Arbitrators Application of EC Competition Law Irrespective of the Lex

Contractus
Interestingly also, despite Switzerlands long-standing reputation as an arbitration
paradise, there is a series of recent Swiss cases which confirm the arbitral application
of EC competition law irrespective of the lex contractus chosen by the contracting
parties. Thus, in an ICC case of 1993, the incumbent arbitration tribunal held that
although the contract in issue was subject to Swiss law,
it is generally agreed that under Article 187(1) PIL,39 arbitrators must or at least
may observe the international public policies of other States or of the European
Communities irrespective of the substantive law applicable. [] Alternatively,
the Tribunals competence to apply or take into account provisions outside the
lex causae can also be derived from Article 19 PIL.40,41
In a subsequent case,42 with regard to an agreement governed by New York law, the
incumbent Swiss arbitration tribunal held that it was under an obligation to apply
Article 85(1) EEC to the agreement due to its effect on trade between the EEC
Member States. This latter approach is clearly supported by the ECJs recognition
of the extra-territorial effect of the Community antitrust Articles. According to the

37

ICC case 7181 (1992), Yearbook of Commercial Arbitration XXI (1996), pp 99 et seq.
ICC case 7539, Journal de Droit International (1996) 1030. It is indeed the responsibility of the
arbitrators to raise even ex officio, but with due care and consideration, the incompatibility of an agreement which is submitted to them with Article 85 [now Article 81] of the Treaty of Rome (Authors
translation).
39 Art 187(1) PIL reads as follows: The arbitration tribunal shall decide according to the law chosen
by the parties, or, in the absence of such choice, according to the law with which the action is most
closely connected (Authors footnote).
40 Art 19 PIL reads as follows: (1) If, according to Swiss legal concepts, the legitimate and manifestly
preponderant interests of a party so require, a mandatory provision of a law other than that designated by
this Statute may be taken into account if the circumstances of the case are closely connected with that
law. (2) In deciding whether such a provision is to be taken into account, its purpose is to be considered
as well as whether its application would result in an adequate decision under Swiss legal concepts
(Authors footnote)
41 ICC case 7673 [1993], published in The ICC International Court of Arbitration Bulletin, vol 6 no
1 (May 1995), pp 57 et seq.
42 ICC case 8626 [1996].
38

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GORDON BLANKE

Courts jurisprudence, these Articles apply to agreements between companies, decisions by associations of undertakings or concerted practices, including those concluded outside the Community by undertakings headquartered in non-Member States
provided they produce an appreciable effect on trade within the Community.43

The arbitrators ex officio application of EC competition law in light of the

contracting parties legitimate expectations
In the result, according to Baudenbacher, [m]odern arbitrators themselves take the
view that competition law is part of the ordre public and that they are able to handle
such questions.44 With this in mind, he advises that
[i]f an arbitrator suspects that competition law may be decisive for the outcome
of the case, he or she should inform the parties and invite them to submit their
view on the issue. If the parties are not prepared to raise the question, the tribunal should apply the relevant provisions ex officio.45
Such an ex officio obligation on part of the arbitrator to invoke the relevant
provisions of competition law is commonly criticized as running counter to the
arbitrators duty to confine himself to the implementation of the lex contractus in
line with the sacrosanct principle of party autonomy underlying the arbitral process.
Derains adequately meets this criticism by arguing that international arbitrators will
take recourse to EC antitrust law only to the extent that such recourse comes within
the legitimate expectations of the contracting parties. Derains further explains that
the legitimate expectations of the parties are not to be confused with the will
of the parties. More specifically, this means that
[t]he express or implied choice by the parties of the law applicable to the merits
of the case does not preclude the possibility in some cases that it is legitimate to
expect that the arbitrator will take into account the operation of a rule that the
parties had not specified as applying to the contract, or indeed, had deliberately
excluded from it.
It is especially in this context that the application of EC antitrust law by
international mandatory rules must be considered.46

43

Case 306/96, Javico v Yves Saint Laurent Parfums [1998] ECR I-1983.
See C Baudenbacher, op cit, p 350.
45 Ibid.
46 For the concept and the relevant terminology of legitimate expectations used by Derains, see Y
Derains, Specific Issues arising in the Enforcement of EC Antitrust Rules by Arbitration Courts in C-D
Ehlermann and I Atanasiu (eds), op cit, pp 323-339, especially at pp 329 et seq. Hochstrasser formulates
the same ideas in terms of the freedom of contract as follows: Just as the freedom of contract, in even
the most liberal legal system, finds its limits at certain mandatory rules, the freedom of the choice of law,
which is nothing more than a different expression of the freedom of contract on the international level,
44

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[2005] EBLR 179

Professor Dalhuisen draws the consequences from this situation with admirable
succinctness when commenting: Since anti-trust laws are mandatory in nature they
cannot be rendered ineffectual or be opted into at will merely through choice of
law clauses.47 Along the same lines, Professor John Temple Lang then DirectorGeneral of Competition of the European Commission has expressed the view that
arbitrators cannot have power to do anything that the parties themselves could not
have validly agreed to do. Therefore, [], since the parties could not have validly
agreed to make Community competition law inapplicable to their agreement, an
arbitrator may not do that.48
Arbitrators would, therefore, be well advised to abstain from making themselves
privy to any of the contracting parties intentions to avoid the mandatory application of European and national antitrust rules.49 Such abstention would also be in the
interests of the arbitral professions integrity more generally, given that the success
and effectiveness of international arbitration ultimately hinges on the goodwill of
the States courts for the enforcement of arbitral awards.50
On this premise, it is not surprising that on occasion, international arbitrators have
been found to decide on the applicability of mandatory rules without questioning
their actual pertinence to the underlying lex contractus. Thus, ruling on a supply
and purchase agreement concluded between an Italian supplier and a South Korean
buyer under both Korean and EC competition law, the sitting arbitrator found that
given the direct effect of Article 85(2) EEC, the arbitral tribunal must on its own
initiative investigate whether the agreement falls under the prohibition of Article 85,
paragraph 1 of the Treaty.51 This was the case despite the subsequent finding of the
tribunal that Korean law was the underlying lex contractus. Importantly, rulings of
this nature should not be considered ultra petitum to the extent that the arbitrator
addressing relevant competition law issues ex propio motu does so only in relation
to an existing claim submitted by one of the parties.52
In light of the foregoing, international arbitrators are best advised to take account
of mandatory rules from outside the lex contractus in the following circumstances:
(i)

(ii)

where the contracting parties selected a specific law with the sole purpose of
circumventing the application of mandatory rules of a legal system that would
have applied to their agreement in the absence of their choice of law;
where the performance of the contract is affected by the invoked mandatory
rules, and there is a close link between performance and the rules at issue;

finds its limits at the mandatory and applicable rules of law affected by an international agreement. See
D Hochstrasser, op cit, p 85.
47 JH Dalhuisen, The Arbitrability of Competition Issues, 11(2) Arb Int, pp 151-167, at p 161.
48 See J Temple Lang in C-D Ehlermann and I Atanasiu (eds), op cit, at p 419.
49 See Y Derains, op cit, in C-D Ehlermann and I Atanasiu (eds), op cit, p 336.
50 To similar effect, see D Hochstrasser, op cit, pp 84-5. See also text accompanying n 10.
51 ICC 4132 [1983], Yearbook of Commercial Arbitration XX (1995), p 49.
52 For a more detailed illustration of this, see Y Derains, op cit, in C-D Ehlermann and I Antanasiu
(eds), op cit, p 337.

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and
(iii) where the enforcement of the award would be at risk in case of the non-application of the mandatory rules concerned.53
Dalhuisen captures the essence of the arbitrators duties admirably when observing:
[] regardless of where arbitrators sit, they must apply the anti-trust rules of
any country with which the case is in all its aspects connected. If there is no
such country, they might apply the anti-trust rules of any other country with
which the contract is closely connected or where the anti-competitive effects
are produced.54

Conclusion
By way of conclusion, it can safely be said that current arbitration practice confirms
the capacity of the international arbitrator to invoke of his own motion relevant
competition law to guarantee the making of an effective and enforceable award.55
Further, as has been seen above, it also appears that
[t]he Eco Swiss judgment establishes the arbitrators duty to apply Community
public policy, which includes Article 81, ex officio. As long as the public policy
of the Community is at stake, the arbitrator, like the judge, is thus no longer
duty-bound to abstain. As guardian of Community policy, he is charged by the
ECJ with the enforcement of the relevant laws and must prevent arbitration from
being used to circumvent the application of public policy rules.56
In terms of the implications of this ruling for the role of the international arbitrator, Komninos concedes that even though arbitrators will remain masters of the
arbitral proceedings, the difference is that they now have the responsibility or the
burden to exercise this discretion in an appropriate way, so as to render an enforceable award that would not violate EC competition law in an EU national court on
ordre public grounds as a result of this violation.57 In this context, it has been
suggested that the arbitrator will also have to bear the burden of meeting a higher
standard of reasoning in the presence of mandatory rules, including competition,

53

For this summary categorization, see also D Hochstrasser, op cit, pp 85-6.

JH Dalhuisen, op cit, p 164.
55 See Y Brulard and Y Quintin, European Community Law and Arbitration: National Versus
Community Public Policy, 18(5) J Int Arb (2001), pp 533-547, at p 535.
56 Y Brulard and Y Quintin, op cit, p 536. Emphasis added.
57 AP Komninos, Arbitration and the Modernisation of European Competition Law Enforcement,
24(2) World Competition (2001), pp 211-238, at p 238.
54

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[2005] EBLR 181

than would normally be required by the courts. In the final analysis, this is likely to
induce the arbitrator more effectively to defend the finality of the award by trying
to convince the courts that it will be unnecessary to subject the award to a judicial
examination on the merits with a view to assessing the accuracy of the arbitrators
assessment of the mandatory rules involved.58
In this context, di Brozolo has helpfully suggested the introduction of a (what
he terms) uniform conflict rule, whereby arbitrators are entrusted with the task
of identifying the applicable mandatory rules by balancing the claims (which might
sometimes even be competing) of such rules in the light of the factual elements of
the dispute and of the links between this and the different legal systems.59 It would
then fall upon the national courts to review the accuracy of the arbitrators reasoning
in any individual award by verifying that the arbitrators have reasonably applied
this conflict rule, notably as to whether to give effect to the competition and other
mandatory rules of the reviewing courts lex fori.60
In any case, irrespective of the final view taken on the arbitrability of competition law issues by international arbitrators, it should be ensured that the quality of
arbitral awards that do take account of antitrust issues reflect a certain measure of
antitrust expertise on part of the individual arbitrator. To say the least, in the legal
profession where specialization has become the rule of the game, arbitral services
can be expected to meet high professional standards. In this context, it does not
seem to be a mere coincidence that not only many international European but also
a number of transatlantic law firms have recently been developing international
arbitration practices with strong antitrust capacities.

58 See di Brozolo, op cit, p 30. On the requirement in international arbitration of sufficiently reasoned
awards more generally, see also RB von Mehren, Some Reflections on the International Arbitration of
Antitrust Issues in BE Hawk (ed), op cit, pp. 403-413, at pp 409-10.
59 See di Brozolo, op cit, p 27.
60 Ibid. Note also in this context that di Brozolo advocates a much more confined concept of public
policy with regard to competition than seems to have been applied in practice to date, ibid, p 29 in
particular.