The Legal Effect on International Arbitral Tribunals of Anti-Suit Injunctions

Issued by the National Courts of the Place of Arbitration

Solomon Girma

ABSTRACT

Nowadays, arbitration proceeding has become a common dispute resolution method, particularly
in the field of international commercial and investment disputes, international disputes over
territorial claims and maritime boundaries. The place of arbitration has a vital role over the
arbitral proceeding and has effects over the legal issues, such as the determination of the
arbitrators, enforcement of the awards, and it also has an impact over the practical issues such as
1
accommodation, visa issues. In recent years ,the number of anti suit injunctions issued by seat
of national courts and directed at the parties, or even at the arbitrators, with a view to terminate
2
or stay arbitral proceedings has increased dramatically. Therefore, what are the justifications and
legal effects of anti suit injunction issued by seat of arbitration?

Keywords: Arbitration, Judicial Intervention, Role of the place of arbitration, Anti suit
injunction, Legal Effect of Anti suit injunction.


LL.B (Haramaya University, 2009), LL.M candidate (Addis Ababa University Law School), Assistant Lecturer of
Law, Madawalabu University, Department of Law. The author can be reached at <[email protected]>
1
Belma Bulut, The role of the place of arbitration in international commercial arbitration proceeding; Turkey as a
place of arbitration, Ankara bar review(2011), p.34
2
Emmanuel Gaillard, Legal Theory of International Arbitration, Martinus Nijhoff Publishers (2010),p.70
I. INTRODUCTION
International arbitration has become the principal method of resolving disputes between
States, individuals, and corporations in almost every aspect of international trade, commerce, and
3
investment. An increasingly well-developed system of international arbitration is now resolving
many international disputes which might once have been addressed by the use of force or never
resolved at all. Treaty-based arbitration of foreign investment disputes, with claims ranging from
millions to billions of dollars, has expanded dramatically, with dozens of investor-state
arbitrations brought by the end of the 20th century, and hundreds today. Important international
disputes over territorial claims and maritime boundaries also are being submitted by States to
international tribunals. With much at stake, these kinds of international arbitration are
4
increasingly being relied upon to settle disputes in a final and binding way.
By choosing to devolve their dispute to arbitration, parties agree to forgo local remedies to
participate in the proceedings administered by a neutral and private means of justice, and to be
5
bound by the award so rendered. This choice relegates national courts to a secondary position,
unless the parties or the arbitral tribunal itself seek the assistance of local forums when they need
6
to remove juridical obstacles from the arbitration proceedings. The role and the extent of the
powers that courts may exercise relating to arbitration vary from country to country, depending
mainly on the general approach national legislation takes towards alternative dispute resolution
mechanisms, which can range from an open mistrust to full acknowledgment of their
7
autonomy. Arbitration which is a modern mechanism to resolve disputes across borders, it may
have four essential characteristics in international arbitration. First, international arbitration has
an autonomous character and exists in a domain independent and separate from national laws and
8
jurisdictions. Secondly, by their choice of arbitration parties have expressed a positive selection

3
Red fern J. ,Martin Hunter et.al ,An Overview of International Arbitration, Oxford University Press (2009), p.36
4
The role of International Tribunals in Dispute Resolution: Investment Arbitration, War time damages, Territorial
Claims, and the Maritime Boundaries of Fish, Gas and Oil, available at <http://www.sais-jhu.edu/graduate-
studies.com>( accessed on 21 April, 2014).
5
Giulia Carbon, Interference of the Court of the Seat with International Arbitration, Journal of Dispute
Resolution(2012), p.1
6
Ibid. Court support is an integral and indispensable part of the arbitration mechanism, as no arbitration can achieve
its purpose without the support of the domestic juridical system.
7
Ibid.
8
Julian D M Lew QC, Does National Court Involvement Undermine the International Arbitration
Processes? ,University of London(2007), p.490
 9
of an alternative dispute resolution system. Third, except in rare circumstances, the arbitral
tribunal has primary responsibility for resolving all matters relating to the settlement of the
10 11
dispute between the parties. Fourth, despite the autonomous nature of arbitration , it must be
recognized that just as no man or woman is an island, so no system of dispute resolution can
12
exist in a vacuum. As to the fourth characteristics, there should be a regular contact between
court and arbitration tribunal for the purpose of helping, supporting and supervising the
arbitration process. Thus, this article assesses the legal effect and extent of “no system of dispute
resolution can exist in a vacuum” specifically when court of seat involves in the arbitral
proceedings.
II. Theories Behind Judicial Intervention and the Role of Seat in
International Arbitration

The involvement of judiciary in the arbitration proceeding is still debatable on the scale of
judicial intervention in the arbitration process. Parties in arbitration want a prompt, less
expensive and final resolution of the dispute, whilst states also want to ensure the arbitral process
13
is just and impartial. While it is argued that arbitration must be free from courts, in order to be
effective, it is also accepted that arbitration needs the support of national courts to be
14
effective. There are four theories relating to judicial intervention in arbitration
15
process. Jurisdictional theory is the first theory which focuses on arbitration agreement and
16
arbitral award are separate, and the latter should be regarded as akin to a court of judgment. In
this theory, an arbitration agreement will be valid and an arbitral award will be enforceable only
if laws of place of arbitration and place of enforcement recognized right of parties to refer the
dispute to arbitration, arbitrators jurisdiction over the case and enforceability of arbitral award.
Always the court determines all aspect of arbitration specially the validity of arbitration
9
Ibid, at 491
10
Ibid. Principle of “Separability of the arbitration agreement” shows the agreement to arbitrate can survive even
where the underlying agreement may be in doubt or found to be invalid or illegal.
11
Ibid. Without prejudice to autonomy, international arbitration does regularly interact with national jurisdictions for
its existence to be legitimate and for support, help, and effectiveness.
12
William W. Park, The Lex Loci Arbitri and International Commercial Arbitration (1983) as cited in Julian DM
Lew QC, supra note 8, p.492
13
Okezie, Chukwumerije, Judicial Supervision of Commercial Arbitration, Arbitration International (1999) as cited
in Angualia Daniel, The Role of Domestic Courts in International Commercial Arbitration(2010), p.8
14
Redfern.A, International Commercial Arbitration: Jurisdiction Denied: the Pyramid Collapse (1986) as cited in
Angualia Daniel, ibid.
15
Angualia Daniel, The Role of Domestic Courts in International Commercial Arbitration(2010), p.8-14
16 Ibid.
agreements and the enforceability of arbitral awards based on the law of the forum. The second
theory which commonly known as Contractual theory, in this theory ones parties agreed to
arbitrate, it contractual and court is an obligation to enforce the award as to any other contract.
The only exception as to this principle is, if under the law of the forum, the court has exclusive
17
jurisdiction over the subject matter of the dispute or if in conflict with public policy. Fixed or
Hybrid theory is the third theory which combines the above two theories and it asserts that if the
court has exclusive jurisdiction over the subject matter of the dispute, or if the arbitrators conduct
the proceedings in defiance of basic principles of equity, or if the award conflicts with the public
policy of the forum, the court in which arbitration held and the enforcement is sought will have a
power to take immediate remedial action and refuse to recognize or enforce the arbitral award.
The fourth and the most recent theory is Autonomous Theory. As to this theory judicial
intervention in arbitration should be unacceptable and national court shall refrain from
interfering with the exercise of the powers entrusted to arbitrators by the parties and confined to
18
assisting the arbitral process when the need arises. The above four theories describe general
conditions when and how national court can intervene the arbitration process.
Basically, the concern of this article is to look legal effect of anti suit injunction, let us assess
specific theories which govern anti suit injunction issued by seat of arbitration. In arbitration
parties are free to choose the place of arbitration which considered as juridical place of
arbitration. A place might be found attractive and efficient because of its procedural laws or its
19
geographical location, costs, and distance to the parties or arbitrators. If the parties want to
apply arbitration proceeding, they should determine the place of arbitration by taking into
20
account both legal and practical issues. In these regard, seat of arbitration has play a vital role in
arbitration process. The role seat of Arbitration strictly connected with the theories concerning
21
the source of the binding effect of international arbitration awards. Without any pretension to
giving a complete overview of a long-running philosophical and juridical debate, it is worth
recalling the two main theories that have shaped the role of the seat of arbitration over at least the
22
last three decades: territorialism and delocalization. In territorialism theory, since arbitration

17
Ibid.
18
Ibid.
19
Belma Bulut, supra note1, p. 35
20
Daniel, supra note15,p. 43
21
Fouchard, International commercial arbitration (1999) as cited in Giulia Carbone, supra note5,p.3
22 Giulia Carbone, supra note5,p.3
acquires its power from law of place of arbitration, thus it is subjected to both jurisdiction of
court and law of seat. Unless parties agreed otherwise, the law of the seat sets both the
procedural rules and the choice of law. As to power given to national court, it has jurisdiction to
23
take corrective measure and review award. In addition, when an award is set aside by the court
24
of the seat, it ceases to exist and cannot be enforced by any other jurisdiction. On the other
hand, Delocalization theory advocate international arbitral tribunals are detached from controls
imposed by the law of the seat in general and arbitration procedures should be 'delocalized' and
completely freed from the mandatory rules and public policy of the place of arbitration.
Accordingly, the arbitrators are not only allowed to disregard law of seat, but may also apply any
procedural law they regard as appropriate. As to this, an award set aside from the country of the
25
seat still can be enforced in any other jurisdiction.
In practice international arbitration has gained relative independence from local courts but
this does not mean that tribunal will disregard undue influence from the court of the seat. As to
26
Guilia Carbone due to two practical reasons, it is impossible to disregard the role and influence
of seat of arbitration even if Delocalization theory argues otherwise. The first practical reason
related with contempt of court if parties participated in the litigation and the arbitrators them self
fail to follow order issued by the court of seat. The second reason related with an award rendered
despite opposition from local courts will be set aside by these courts and never be enforced. This
can render the arbitration proceedings useless when the losing party's assets are located in the
country of the seat, but also can constitute a problem if the award requires enforcement in a State
whose courts are reluctant to enforce an award that has been annulled in the state of
27
origin. Court of seat may involve in the arbitration proceeding for the purpose of assuring and
supervising a minimum standards of due process law and fairness of the arbitral proceedings in
addition to support arbitration tribunal. On the other hand, to prevent the confidence of users of

23 supra note21,p.4
24 Ibid.
25 Ibid.
26
LL.M. Cantab, J.D. Boccioni University, LL.B. Boccioni University, Associate at `Boncili Erede Pappalardo,
Milan
27 Ibid.
 28
the arbitral system from being damaged, the level of judicial control should not be too high and
29
limited to certain strict circumstances as achieve the arbitration goal.
III. Legal Effect of Anti-suit Injunction Issued by the
place of
Arbitration
In the context of international arbitration, anti-suit injunctions are generally issued either
during the arbitral process in order to prevent an arbitral tribunal from hearing the claim or, at the
30
end of the arbitral process, to obstruct the enforcement of the arbitral award. When they are
requested during the course of arbitral proceedings, anti suit injunctions are usually directed
against the tribunal and the parties in the form of an order to suspend or terminate the arbitral
31
proceedings. In the context of post-arbitral proceedings, anti-suit injunctions are sought by the
losing party as a means to obstruct the enforcement of the arbitral award. Since as mentioned
somewhere, this article limited itself on anti suit injunction issued before final award is given, let
us look justification of anti suit injunction and role of seat of arbitration in current status.
Jurisprudential theories and practice of international arbitration shows, court involvement in
arbitration proceeding is indispensable and purpose of arbitration will not be achieved without
support and supervision of seat. Indeed tribunals also comply and respect orders issued by the
court for the purpose of supporting and supervising. The main area of dispute in this regard
among scholars and practitioners of international arbitration is degree and extent of court
involvement. It is generally agreed principle that Court involvement must not extent up to
32
unjustifiable interference. Thus, what are those grounds considered as unjustifiable
interference? What the international practice and real cases show in this junction?
As to the knowledge of the writer, most of arbitration cases which has been anti suit
injunction issued on was based themselves either the tribunal has no jurisdiction to entertain the
case which is exclusive jurisdiction of the national courts in challenging scope and validity of

28 Daniel, supra note15,p. 2

29
See Article 5(1)(d) of Convention on the Recognition and Enforcement of Foreign Arbitral Awards(1958) which
an award may be refused if it has been set aside or suspended the country in which, or under the law of which the
award was made. However, although an arbitral award is set aside in the country of the place of arbitration it might
be recognized and enforced in another country. This particularly arises where the award is set aside on the ground of
the public policy of the place of arbitration.
30 Gaillard, supra note2
31 Ibid
32 See United Nations Commission on International Trade Law Model (1985) clearly exclude interference
except in limited grounds. Principle of parties' autonomy requires the role of judicial organs be restricted and court's
powers upon ongoing arbitration proceedings be limited to situations that are statutorily permitted.
arbitration clause or depending upon arbitrators incompetence, abuse of power, biased, lack of
independence and other related grounds. Therefore in order to look legality of anti suit
injunction, it is necessary to look grounds specified by seat arbitration for the purpose of two
practical reasons. Firstly, the reaction of the tribunal towards anti suit injunction will help to
attain justifiability of the order. Secondly, impossible to think arbitration tribunal are always out
of mistake and never violate mandatory provisions of law of seat. Seat courts involved on
33
arbitration proceeding in number of cases based on challenging the scope and validity of
arbitration clause as to not the tribunal has jurisdiction to entertain the case which the subject
matter is exclusive jurisdiction of the court. In principle not all matters are subject to arbitration
by the mere agreement of parties. There might be issues which by their nature or on limitation
imposed by state legislation, may not submit to arbitration either willingly or unwillingly. For
instance, in Ethiopia article 315(2) of Ethiopian civil procedure code provide that no arbitration
may take place in relation to administrative contracts or in any other case where it is prohibited
34
by law. The main question should have to answer regarding who will decide the case will not
submit to tribunal i.e. whether the tribunal has jurisdiction or not? What is the extent of seat
court in determining the competence of the tribunal?
35
Almost all international arbitration agreements, conventions and scholars of the subject area
accepted the principle of competence- competence. As per this principle, the tribunal itself
determines whether it has a jurisdiction or not. For instance article 3330(2) Ethiopian civil code
36
incorporates the principle of competence –competence. But the mere fact that the tribunal has a
power to determine its competence will not qualify it to give a judgment on matters that
exclusively conferred to ordinary court even if the tribunal decides as to have a jurisdiction. On
such decision the reaction of courts are expectable and undeniable to involve on the decision
37
unless specific treaty arrangement govern otherwise. The question goes to answer „when‟ the
court will react on the decision of the tribunal? Simply can the national court react on the above
ground immediately at the decision is given or after final award is given? The reaction of court

33
See cases accessed easily on internet: Pacificar v. Book, Chicago v. Kaplan, Cuna v.Office and professional
Employees International Union, Salini Contruttori SPA v.Ethiopia, Hubco v.WAPDA,UEG Araucaria v.Copel
34 Civil Procedure Code of Ethiopia of 1965 (Hereinafter referred to as „CPC‟).
35
See both Article 41 of ICSID Convention on the Settlement of Investment Disputes Between States and Nationals
of Other States and Article 23 of UNCITRAL(as revised in 2010)
36 Civil Code of Ethiopia 1960 (Hereinafter referred to as „CC‟).
37
See article 26 ICSID unlike other agreements, it prohibit states from challenging tribunal decision on is
competence.
on the above mentioned challenge is different from country to country. For instance in Ethiopia,
the cumulative reading of Article 355 and 356 of CPC shows the court may not intervene at any
moment and at any ground including to determine scope and validity of arbitration agreement
before an award is rendered except as per article 3342(3) of Civil code where application for
disqualification arbitrators are dismissed by competent organ of arbitration within ten days.
38
French civil code also stands in favor of challenge after final award. Unlike this, countries like
USA favored the court can intervene at any moment to determine scope and validity of
39
arbitration agreement even before a final award is given. Apart from the two above sides,
England rules of arbitration incorporate the hybrid position which in principle not accepts
challenging the arbitral tribunal but there is an exceptional circumstance where the court can
40
involve on the decision of tribunal before award is rendered. On the other hand, different
agreements, arbitration centers establishment conventions and other related rules, clearly put
specific provisional remedies in order to handle problem related to Competence of the tribunals.
To avoid this, most of them design internal mechanisms to challenge competence related
complains for the purpose of reducing national courts intervention before final award is
41
rendered.
Depending up on the overall jurisprudential assessment of the subject matter, the author of
this article strongly argued that court of seat intervention based on scope and validity of
arbitration agreement should be against the principle of competence –competence and court of
seat must wait up to final award is rendered even if it is against time and cost to wait until the
award will rendered as far as such the decision of the tribunal become invalidated on the same
ground after final award. This is because of three reasons, the first and the most important reason
is nowadays states which is party in the dispute and at the same time seat of place of arbitration
used this ground in order to protect their interest in abusing their power. The secondly, look into
the very purpose of arbitration in general which such kind of action will discourage arbitration as
a means of dispute settlement and it is against free will of parties to settle their dispute in
peaceful means. Thirdly, the possibility of parties not raises the issue before the court of law

38
See article 1458 of the French Code de Procedure Civile.
39
See United state Federal Arbitration Act title 9,chapter 1,section 3
40
See English Arbitration Act 1996, section 32
41
See United Nations Commission on International Trade Law (UNITRAL) Model law, article 52 of International
Centre for Settlement of Investment Disputes (ICSID), International Chamber Commerce Article 11 are among few
arbitration agreements
even after final award. At last anti suit injunction issued based on this has no effect and the
tribunal must proceed its work without considering the injunction.
The second common aspect of judicial interference by seat of arbitration was based itself on
Arbitrators partiality, biased, abuse of power, lack of independence and other related factors. As
a result, Courts of seat may order removal of arbitrators. It is true that the main role of seat as
mention somewhere in this article is assuring the minimum standards of due process of law and
fair proceeding of the arbitration process. Arbitrators‟ partiality, biased, abuse of power and lack
of independence are clear violations of due process of law and fairness. Like that of resolving
jurisdictional challenges, most of international arbitration agreements or conventions
42
incorporated internal remedial mechanisms to solve arbitrator‟s incompetence in terms of
biased, partiality dependence and the like. The cumulative reading of article 3340 and 3342(3)
Ethiopia CC also allow the court to intervene on arbitration based on partiality, unfairness and
related grounds which disqualify and subjected them for the removal even before final award is
given and within ten days after application for disqualification dismissed by competent body of
arbitration. As to the writer, if those internal mechanisms solve the problem immediately, it is
not as such a challenge, but if those mechanisms are delayed or if not confirmed as a problem or
if the signed competent organ denies the problem, this will be a justifiable ground for the court to
interfere into the arbitration proceeding even before final award. The mere fact that internal
remedial mechanism clearly prohibits further litigation and considered such decision as a final,
43
this will never prohibit the court of seat to look into the case. This can be relates with court
obligation to support and supervise the arbitration process and inherent power of court to take
remedial action both by issuing anti suit injunction and set-aside the final award.
Generally, the only courts that should become involved in the arbitration process are those at
the seat of arbitration or the place of enforcement. Thus, the involvement by seat of arbitration is
required for the purpose both supporting and supervising the arbitration process. The writer may
not deny the existence of extreme position which advocates seat court involvement is
illegitimate, including actions to protect nationals of a particular country, to intimidate
arbitrators, to protect national jurisdictional interests, or simply because the court thinks that it is
better suited than arbitral tribunals to decide. The writer of this article favored the first position

42 Ibid. article 11 of ICC

43 See AT and T v. Saudi Cable case .In this case the holding shows it is inherent right of court to look the
case even if there is finality clause .It considered as an internationally agreed principle.
 which court of seat has an obligation both in supporting and supervising the arbitration process
and both parties and tribunals also respect the order of seat court as far as not goes beyond
justifiable extent. Therefore, the legal effect of seat court involvement must be analyzed in
conformity with the principle of due process of law, fairness and purpose of arbitration as
indicated above.
IV. CASE ANALYSIS
SALINI CONTRUTTORI SPA V. THE FEDERAL DEMOCRATIC REPUBLIC OF
44
ETHIOPIA, ADDIS ABABA SEWERAGE AND WATER AUTHORITY ICC
Salini Contruttori SPA claimants of the arbitration was agreed with respondent Addis Ababa
Sewerage and Water Authority for construction and completion of emergency Dire Dam water
transmission line project for Addis Ababa city. An arbitration clause was providing ICC rules
and Addis Ababa was said to be seat of arbitration. The claimant brought its claim to Arbitral
tribunal which composed of professor Piero Bernardini from the side of claimant ,Dr.Nael Bunni
from respondent side and Emmanuel Gaillard by agreement of parties assigned as President. The
dispute begins where tribunal holds its meeting in Paris due to more convenient to hear witness
without prejudice to Addis Ababa remaining the place of arbitration. The respondent challenge
the decision of arbitrators as illegitimate procedural decision and requested for removal and
replacement of arbitrators as per article 11 of ICC rule on unfairness, partiality, abuse their
discretionary power to hold hearing in appropriate place and clear violation of article 12 of ICC
rule. ICC Arbitral Tribunal rejected the objection of removal of arbitrators. As per article
3342(3) of Ethiopia Civil code, the respondent file two application one is on the rejection of
application to Supreme Court of Ethiopia and another is to challenge competence of tribunal at
Federal First Instance court. Supreme Court issued anti suit injunction and Federal First Instance
Court also decides that the tribunal has no jurisdiction to entertain the case. The tribunal on its
side rejects both anti suit injunction and lack of jurisdiction decision.
For the purpose of this topic let us look the above two orders issued by seat of arbitration and
the response of arbitration Tribunal. Firstly, a decision given by Federal First Instance Court as
to the tribunal has no jurisdiction based on scope and validity of arbitration agreement is clearly
a violation of the principle of Competence –competence. As to this principle, the tribunal itself

44
See International Chamber Commerce case no.10623
determine whether it have jurisdiction or not. A number of international arbitration agreements,
45 46
conventions and cases accept this principle as international arbitration rule. The order issued
by the court is not only contradict with international accepted principle of competence-
competence but also clear violation law stated under Article 3330(2) of Ethiopian CC .Even in
case, court commit mistake as to have jurisdiction, the court should have to wait up to final
award as per cumulative reading of article 355 and 356 of Ethiopian civil procedure code. Thus
the decision given by Federal First Instance Court is illegal and has no legal effect on the
Tribunal to comply with this decision. Because such decision was given by disregarding the
power of tribunal recognized by Ethiopian and before the tribunal gives a final award which is
against the law of forum and the principle of Competence –competence.
When we see an order issued by Federal Supreme Court of Ethiopia towards the tribunal to
stop proceeding as per appeal applicant ,applicant complain that Arbitrators are partial ,unfair
and abuse their power specified under article 12 of ICC and replacement of arbitrators was
rejected by the organ expected to hear the complain. As indicated in the above detail discussion,
challenging arbitrators based on partiality, unfairness and related grounds are common and
justifiable ground for intervention. Indeed from AT and T v. Saudi Cable case, we can easily
understand that the mere rejection of ICC on the complain for replacement of arbitrator will not
be final and a party who unsatisfied by the decision may have an inherent right to appeal to the
court of seat. Theoretical debates remains as its , once parties select place of seat, both parties
and the tribunal must respect the law of seat and may not act contrary to the law of the seat. As to
the law of the forum Ethiopian CC article 3342(3) clearly stipulates that where the application
for disqualification is dismissed, this decision may be appealed against in court within ten days
before final award is given. As everyone easily refers the document of the case, respondent pass
all procedural requirements to exhaust its claim based on ICC procedure. Therefore as to the law
of seat all thing which Federal Supreme Court decided is legal and the tribunal must respect the
order. The tribunal is not only supported by seat court but also supervised by it. What the
tribunal did in this case was against the free will of parties because while parties agreed to select
place of seat not only for the purpose of convenience but also agreed to respect the law of the
seat. Finally at any cost, the role of seat may not limit to help only but also supervise the tribunal

45 Supra note 35
46 Supra note 33
 too. Therefore the action of the tribunal is illegal and contrary of the accepted principles and the
law of seat which will result contempt of court and had it been final decision was given it cannot
be enforceable in courts of seat.
V. CONCLUTION
Since no system of dispute resolution can exist in a vacuum, place of arbitration court has play a
vital role over the arbitration proceeding. Seat of arbitration must support and supervise the
arbitration process but this does not mean that unjustifiable interfere is allowed in international
arbitration. Any involvement of place of arbitration may not embed choice of disputing parties
which relegates national courts to a secondary position. On the other hand Arbitrators and parties
must give national courts due respect because it is the national courts that ultimately hold the
keys to recognition and enforcement.