Legal interpretation and adjudicatory activism in international commercial arbitration

Abstract

This chapter discusses creative aspects of legal interpretation and the practice of adjudicatory activism in international commercial arbitration. It analyses cases in which arbitrators arrive at their decisions by reaching beyond the letter of the applicable law while acting either within the limits of their discretion or by exceeding them. In particular, it focuses on situations in which such activity leads to an expression, formulation, and consolidation of formerly unspecified rules. The chapter critically revisits dynamic theories of legal interpretation (formulated primarily in the context of litigation before the domestic courts), and examines their applicability to arbitration, in a form adjusted to specific demands of arbitral decision-making. It further examines particularities of interpretative practice in international commercial arbitration, related to application of the lex mercatoria principles, to amiable composition, and to public order considerations.