Arbitration and European Community Law

Abstract: The national courts of the Member States in the European Community are obliged to apply the Community law when it is relevant to the case before them. This obligation arises out of the co-operation principle laid down in Article 5 of the EC Treaty. When a national court is to apply a Community provision, and finds itself in doubt about how the provision is to be interpreted, or applied, that court can refer a question to the European Court of Justice (ECJ) on the interpretation, or application, of the provision. This possibility to refer to the ECJ is reserved for the courts, or tribunals, of the Member States. In order to be regarded as a court or tribunal certain criteria have to be fulfilled. The arbitrators do not fulfil these criteria and are consequently not competent to refer a question to the ECJ on the interpretation, or application, of Community law. The arbitrators are however obliged to apply relevant Community provisions. This obligation to apply Community law, combined with the lack of the possibility to ask the ECJ for help on how to apply and interpret the Community law, is problematic. At the same time, as the arbitrators may need help on the application of Community law, a reference process might endanger the fundamental features of arbitration. The arbitrators' competence to apply Community provisions is not always clear. The ECJ has not revealed its opinion on how far it is possible for Community law to be settled in arbitration. The arbitrators in the Community are nevertheless conferring on themselves extensive powers on the application of Community provisions. The only limits on the arbitrator's jurisdiction seems to be the exclusive powers of a Community Institution to apply a provision. This means that, in the competition area, the arbitrators are not competent to apply the competition provisions that are exclusively within the powers of the Commission to enforce. The arbitrator's decision on a dispute is binding on the parties to the arbitration agreement. One of the parties can nevertheless challenge the award or resist any attempt to have the award recognised or enforced. The possibilities to achieve this on the grounds of Community law are however limited. The only possibility for the resisting party is if the award is in breach of the Community competition provisions. The duty of national courts is to apply binding and directly applicable Community provisions on their own motions. This obligation most certainly extends to cases when the courts are asked to recognise, or enforce, an arbitration award. Whether the arbitrators also are under such an obligation will soon be determined by the ECJ. An obligation for arbitrators to apply Community law ex officio might however imperil the very nature of arbitration: that it is the parties concerned who set the limits to the arbitration agreement by their agreement.