In international commerce, arbitration is often used to efficiently resolve disputes without the involvement of national judges. Arbitration is a commonly used method in which the parties to the dispute determine the matters for the arbitrator to consider. In other words, the parties grant the arbitrator a mandate to resolve the dispute. However, because the scope of the mandate is not always clearly defined, the losing party often cites the arbitrator's exceeding of the mandate as a reason to challenge the arbitral award. Piotr Wilinski, Assistant Professor of International Commercial Arbitration at Erasmus School of Law, wrote his doctoral dissertation on the exceeding of power in international commercial arbitration. He examined compliance with the mandate by arbitrators from different perspectives. His thesis received an honourable mention from the jury of the 2021 Academic Prize of the Belgian Centre for Arbitration and Mediation (CEPANI).
“International commercial arbitration is a dispute resolution mechanism that allows the companies to settle their differences outside court. With an explicit agreement between the parties (arbitration clause), the companies are allowed to 'contract out' of the court system”, explains Wilinski. “It is an important device for companies because there are many benefits for which parties may wish to opt for arbitration. These include worldwide enforceability of arbitration awards, the possibility to choose their own arbitrator, expertise of decision makers amongst others.”
Arbitrator’s mandate as a moving target
These characteristics of an international arbitration make it a popular tool, but the excess of arbitrator’s mandate is one of often invoked grounds to challenge arbitral award. Wilinski: “The thesis deals with the issue of the arbitral tribunal's mandate, a concept that is not easy to classify. One the one hand the tribunal's mandate can be defined as a judge-like power of the tribunal to resolve (adjudicate) the dispute between the parties. If interpreted this way, it becomes close to a function of a judge in the court system. On the other hand, the tribunal's mandate can be perceived from a contractual perspective, which links the tribunal's function to the agreement between the arbitrators and the parties in arbitration. In this case, the function of the tribunal is closely linked to a service provided to the parties. The distinction is important, because – depending on the perspective taken – the scope of the tribunal's powers will be different. This leads to disagreements whether the tribunal complied with its mandate or rather exceeded it.”
Defining the mandate should be a joint effort
Wilinski’s dissertation shows that ‘exceeding of the mandate’ is a popular ground for challenging the award: “Notably, since the concept of mandate is vague, its broad interpretation by the parties wishing to challenge an arbitral award at the post-award stage leads to a frustration of the fundamental value of arbitration – the finality of the arbitral award.”
Wilinski pleas for an active involvement of all parties: “In order to preserve the functioning of the system, both parties and arbitrators are well advised to take an active role in defining the mandate tailored to their needs on a case-by-case basis. At the same time, courts should remain mindful that invoking "the excess of mandate" should not be considered as an invitation to act as an appeal body, because reviewing the merits of the underlying dispute is not allowed in arbitration.”
Wilinski's thesis received high praise from the jury of the Academic Prize of CEPANI. According to the Jury: “The comparative approach follows a structured methodology with extensive research provided in support. This too is a very easy read of a complex topic […].” The Jury also highlights a practical importance of the book: “the litigator in particular, will value this book immensely as it not only provides answers to all questions on the tribunal’s mandate, but is also a source of inspiration. Arbitrators, too, will be well-advised to have this excellent thesis at hand.”
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Click here for the thesis “Excess of Powers in International Commercial Arbitration - Compliance with the Arbitral Tribunal’s mandate in a comparative perspective”.