Browsing by Author "Jeganova, Olga"

This study explores the question of whether arbitrators have the power to adapt international commercial contracts. Adapting a contract refers to an act of an arbitral tribunal to adjust the terms of the contract to a new situation for the parties. The number of claims concerning the adaptation of contracts has seen a substantial growth during the recent decades in the practice of international commercial arbitration. Yet, contract adaptation has historically been conceived to represent a distinct function from the typical powers of arbitrators. The purpose of this study is to examine whether the traditional reluctance to grant arbitrators such power is still justified in modern arbitration law. The subject is approached through legal dogmatic and comparative inquiry. This study regards contract adaptation primarily as a question of substance, although it has implications also on the level of procedural law. The first research question examines whether arbitrators are authorized to adapt a contract in an individual case. This study reveals that such authority may stem from either contractual adaptation clauses or the provisions of the law applicable to the substance of the dispute. In this connection, several different types of adaptation clauses are introduced. Furthermore, the rules of various national legal systems concerning the adaptation of contracts are compared and analyzed. The outcome of this study indicates that even the most conservative legal systems have recently shown a tendency in favour of the possibility of arbitrators to adapt contracts. Due to the strict criteria for exercising this possibility under most national contract laws, it is suggested in this study that contracting parties expressly regulate themselves on whether and how arbitrators may adapt their contract. The second research question, in turn, focuses on whether the law applicable to the arbitration sets down any limitations to arbitrators' powers. The parties' choice to arbitrate in a particular country brings with it submission to the arbitration law of that country, which may curtail arbitrators' power to adapt contracts. However, this study reveals that most arbitration statutes do not expressly restrict arbitrators' powers in this respect. It is thereby submitted that even a general arbitration agreement may suffice to confer arbitrators with the power to adapt a contract, unless the applicable arbitration law explicitly prohibits arbitrators from doing so. The third research question examines the legal nature of a decision in which a contract is adapted, as well as problems that may arise at the enforcement level. This study indicates that arbitrators may generally adapt a contract in the form of an arbitral award enforceable under the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, provided that the relief granted is in accordance with the parties' claims. In addition, the question of enforceability of the award is resolved under the law applicable to the arbitration, whereas the law of the enforcement forum does not affect this consideration. The outcome of this study indicates that the modern approach in international arbitration is in favour of contract adaptation by arbitrators. However, the best way to ensure the adaptation of the contract is to regulate the matter expressly in the contract. Even more so because the parties are always in the best position to make decisions regarding their contractual relationship, whereas arbitration should be considered as a solution of last resort.