Albert Bates Jr. and R. Zachary Torres-Fowler published the article “Abuse of Due Process in International Arbitration: Is Due Process Paranoia Irrational?” in the American Journal for Construction Arbitration & ADR (June 2018, Vol. 1, No. 2).
Fundamental procedural fairness is at the core of the international arbitral system and an arbitral tribunal’s failure to ensure that the basic requirements of procedural fairness are satisfied, place the survival of a subsequent award at risk. Indeed, Article V(1)(b) of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”) embodies this concept by stating that a local court – the local court of a country where an international arbitration award may be challenged as a matter of set aside or enforcement – may refuse to enforce an arbitration award if “[t]he party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case.” Although Article (V)(1)(b) of the New York Convention is a relatively common ground upon which to challenge an arbitration award, by in large, those challenges are rarely successful. However, parties’ willingness to challenge an award for lack of procedural fairness or a denial of due process has given rise to an unwelcome trend in international arbitration.
Specifically, in recent years, a group of academics and practitioners in the field of international arbitration have increasingly raised concerns over an ongoing practice by arbitrators to render procedural decisions (e.g., extensions of time, postponement of hearings, discovery requests) out of fear that ruling otherwise would infringe on a party’s due process rights. This practice stems from, and has increasingly lead to, a strategy by savvy respondents to raise procedural applications and objections citing (or at least alluding to) due process concerns, enabling respondents to simultaneously delay the arbitration and build a case for set aside or an enforcement challenge later on – what we will refer to as the “abuse of due process problem.” In these cases, parties requesting procedural relief during an arbitration allege (either implicitly or explicitly) that the denial of the requested relief will violate the party’s right to due process and give rise to a challenge to a subsequent arbitration award before the local courts. As Lucy Reed aptly described, there is a growing trend in international arbitration of a “routine, often incessant and shrill, invocation of multiple procedural complaints under the banner of due process.” This practice, as Reed explained, has enabled certain parties to use due process as both a sword and a shield.
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