Arbitration - Investing into North African Solar Power - page 120

The UNCITRAL also dealt with the issue of public policy as well. It mentioned
explicitly (in relation to the UNCITRAL Model Law and the NY Convention) that
public policy only encompasses fundamental principles of law and justice. 588
Arbitrators are obligated to apply issues of public policy already during the
arbitration. 589 Nevertheless, the amount of number enforced under the NY Con-
vention is very high. 590 Furthermore, the ILC Public Policy Recommendations
offer some guidance as well. For example, Recommendation 1 No. 1(e) 2002 of
the ILC Public Policy Recommendations gives examples of the term “fundamental
principle”, e.g. the prohibition of abuse of rights. Recommendation 2 No. 2(b) 2002
of the ILC Public Policy Recommendations offers a guideline of possible reasons of
rejection before award enforcement is denied.
Mandatory rules are different to public policy rules. As the ILA recommends in
Recommendation 3(a) of ILA Resolution, mere mandatory rules cannot deny
enforcement of an arbitral award, unless the mandatory rule is part of international
public policy. However, the ILA does not define mandatory rules, which makes the
application quite difficult. One author proposes that:
[M]andatory rules are commonly understood as rules which cannot be excluded by the
parties agreement, and which may apply alternatively (or at least additionally) to the

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parties chosen law These rules are so important that they are applicable in spite of, and

even independent of, any choice of law process. 591

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The main differences between both concepts are that public policy is not regarded
as law affecting enforcement and choice of law issues, and has a wide variety of
sources. This is different concerning mandatory rules, which are status of law,
mainly affecting the choice of law and have predominantly statutory sources. 592

2.7.1 Types of Public Policy

Sometimes there is a distinction between domestic and international public pol-
icy. 593 Thus, not everything which constitutes a breach of domestic public policy
violates international public policy. 594 Some authors mention that both forms of
public policy often overlap, but until today there are still tensions because of the
difficult delimitation of both concepts. 595 Domestic public policy encompasses

588

UNCITRAL ( 1985 ), 3 (36) para 297.

589

Otherwise there would be a high risk that a national court overturns the decision afterwards, in:
Hanotiau and Caprasse ( 2008 ), 721 (726).
590 Saunders and Salomon ( 2007 ), 467 (467).
591 Ma ( 2005 ), 122.
592 Ma ( 2005 ), 124-127.
593 Further theories concerning public policy, in: Ma ( 2005 ), 34 and 80 et seq.
594 Ozumba ( 2009 ), 6; Hanotiau and Caprasse ( 2008 ), 721 (730).
595 Ma ( 2005 ), 82-87.