[Seoul] KCAB - NYU Seminar: Inherent Powers of Arbitrators

On June 10th, 2019, KCAB INTERNATIONAL and New York University School of Law jointly hosted the seminar “INHERENT POWERS OF ARBITRATORS” held in Seoul IDRC. Four speakers – Professor Franco Ferrari (Director, Center for Transnational Litigation, Arbitration and Commercial Law), Professor Seungwha Chang (Dean of SNU School of Law, Member of KCAB INTERNATIONAL Arbitration Committee), Dr. Friedrich Rosenfeld (Partner, Hanefeld Rechtsanw?lte) and Professor Joongi Kim (Professor of Law, Yonsei Law School, Member of KCAB International Arbitration Committee) – were invited to share their insights on the fundamental questions rising from international arbitrations, ranging from practical implications to applicability of the inherent powers of arbitrators.

The proceedings were moderated by KCAB INTERNATIONAL Secretary General, Sue Hyun Lim. The event was commenced with KCAB INTERNATIONAL Chairman, Hi-Taek Shin’s opening remarks in which he guided the audience on the issue of inherent powers of arbitrators.

The seminar was composed of two sessions, with each session inviting two speakers to debate on the issue of inherent powers of arbitrators. On the first session, Professor Ferrari and Professor Chang shared their academic views.

The first speaker of the event, Professor Franco Ferrari, shared his critical view on exercising broad inherent powers of arbitrators. While acknowledging that the source of inherent powers stems from the nature of the arbitral body, he noted that in terms of reality in which courts exercise more scrutiny on enforcing awards based on inherent powers, the scope of inherent powers should be reduced to the extent that implied powers are construed extensively to ensure the enforceability of the arbitration award.

Professor Ferrari also highlighted a common misconception where the usage of the terms inherent and implied powers of arbitrators are made interchangeably while the two should be clearly differentiated. Citing several scholars, he distinguished implied powers as those that can be derived from a text or a provision either form the arbitration clause agreed by the contracting parties or the rules chosen by the parties and inherent powers as those one should be able to resort in an unexpected and unusual issues not directly addressed by any rules or law.

The second speaker of the event, Professor Seungwha Chang, outlined his view on tracing the source and exercising inherent powers of arbitrators in practical terms. Professor Chang started his session with his comments on Professor Ferrari’s view. He supported Professor Ferrari’s point that the source of inherent powers come from the nature of arbitral powers but also stressed that arbitrators, if possible, should put their best efforts to find any reliable source or legal basis of such inherent powers.

Later, Professor Chang shed light on explicit sources that could be considered as an implied source of inherent powers. For instance, he highlighted ICSID and UNCITRAL rules authorizing discretionary powers over jurisdiction issue. Also, he gave practical suggestion for arbitrators based on his wealth of experience. He urged not to surprise the parties by proclaiming a self-claimed right of inherent powers but rather to approach and guide the parties to raise the issue on their own behalf. Also, he advised to refrain from relying on the judicial nature of the arbitral body but to find an explicit source of inherent powers either from a domestic legislation or from an arbitral rule.

A brief networking time and coffee break took place after the first session. On the second session, Dr. Rosenfeld and Professor Joongi Kim shared their views on the issue.

Dr. Friedrich Rosenfeld, the third speaker, started his session with a brief overview of the concept of inherent powers of arbitrators and focused his discussion on inherent powers to reconsider and revise the arbitrator’s decision. He summarised the dilemma as whether to refrain from taking a second glance at a decision that has been rendered and exercise inherent powers to have accuracy prevail over finality or to correct errors in order have finality to prevail over accuracy. To provide further insight, he also gave examples of post WWI sabotage case and Venezuela case where the issue of accuracy and finality conflicted in light of legal certainty.

Dr. Rosenfeld made his final remarks reflecting upon a recent trend in which the case for reconsideration and revision is extremely limited that the issue potentially no longer need to be grounded upon gap filling provision of inherent powers and broader notions of justice. He thereby stressed that it is down to the tribunals to use its inherent powers as intrinsic justificatory mechanism have diminished the need to make reference to extrinsic consideration and broader notion of justice.

The last speaker of the seminar, Professor Joongi Kim, shared his view on the issue through presenting series of thought provoking examples. Professor Kim noted two elements that should be considered in reconsideration of an award that has been rendered: elapsed time since the issue of award and functus officio. Later, he shared two examples from his experience where an arbitrator could face a dilemma to exercise inherent powers. Explaining the examples, Professor Kim shared his thoughts through heated debated with Dr. Rosenfeld and Professor Ferrari.

The first example was based on a case where a conflict of interest was raised. Although the specific matter was dealt in the local bar association, the immediate question for the arbitrators was whether to allow the counsel to represent the party. On that particular case, the tribunal decided not to exercise any powers to exclude the counsel. Regarding this issue, Dr. Rosenfeld expressed his view that in principle the arbitrator may have the power to exclude the counsel in such situation while noting that the issue is a matter of threshold. He later emphasised that such a power clearly exists in the arbitration framework.

In the second example, a counsel continuously twisted the facts to mislead the witness during cross examination; however, the opposing counsel failed to notice while the tribunal did. On such circumstances, the issue was whether the tribunal could or ought to raise an issue in light of fairness. Regarding such a matter, Professor Kim expressed his scepticism that arbitrators would not tend to put on the brakes in reality. Agreeing to such point, Professor Ferrari also noted that realistic constraints such as re-nomination in future cases would pressure the arbitrators to refrain from exercising such powers.

After a series of productive panel discussion, the seminar concluded with a Question & Answer session. The speakers of the event debated on practical questions such as the tribunal’s authority to reconsider expert determination. On such particular question, the panel suggested that the issue could be largely dealt as an issue of contractual element. 

For more information about KCAB INTERNATIONAL and our future events, please visit www.kcabinternational.or.kr or contact [email protected].

Written by KCAB INTERNATIONAL intern, Donggil (Brian) Baek.