Volume 30 (2013) / Issue 1
This article examines the conflict of laws issues (with an emphasis on choice of law) arising in the context of punitive damages claims in international commercial arbitration. It explains that the appropriate choice of law methodology is based on a distinction between the 'power' of arbitrators to grant punitive relief (governed by the applicable arbitration law) and the 'availability' of punitive damages stricto sensu (governed by the applicable substantive law). It shows that this approach is confirmed by most available arbitral awards and court decisions. In this respect, it highlights that the US Supreme Court's decision in Mastrobuono v. Shearson Lehman Hutton, Inc. is frequently misinterpreted as implying that arbitral tribunals sitting in the United States (and thus subject to US arbitration law) may award exemplary damages despite those damages being unavailable under the applicable substantive law. This article also explores the impact of the incompatibility of punitive damages with the public policy of the arbitral seat and other relevant jurisdictions.
All rights reserved