Comparative Method

Chapter 7
Comparative Method

Comparative Analysis – its Concept and Role in Adjudication

As S.I. Strong emphasizes in his study on research skills in international arbitration, the competences needed for construing legally exhaustive and persuasive argumentation in this field necessarily require the adoption of a comparative perspective.¹ The essentially international nature of the arbitral process, combined with its increasingly cross-cultural character, as discussed in Chapter 6, inevitably places a comparative approach at the very core of methods applied by arbitration practitioners:

the best written submission in this area of law adopts a purposeful blend of common-law and civil-law techniques. Any advocate who is unaware of how lawyers from different systems view legal authority will be unable to craft arguments that demonstrate the kind of sophistication and complexity that re the hallmarks of a good international practitioner.²

This particular, very fundamental need for comparative expertise and sensitivity in ICA is combined with notably high entry barriers in terms of training materials. It has been pointed out that the restricted access to resources (arbitral awards, but also commentaries and articles authored by leading experts) might effectively hamper the development and proliferation of skills in the discipline at a pace that would be consistent with the unprecedented global growth of ICA in the last decades.³

As already discussed, this results in practitioners occasionally transferring their habits from litigation, whilst not always fully adequate in the arbitration context (as, without guidance, beginners in this area of legal practice are not just unfamiliar with their content, but often not even cognizant of the existence of relevant materials). This is highly unfortunate, as the differences between the practice of ICA and those of both litigation and domestic arbitration are substantial (as Jan Paulsson famously observed, ‘international arbitration is not arbitration’⁴). In Strong’s opinion this deepening dissonance has already led ICA to a critical moment of its evolution, as many skills and competences connected with its practice are endangered.5

The comparative method is strongly present on all three levels of application of law (and other binding rules) in international arbitration. Whereas a familiarity with comparative aspects of arbitral procedure and conflict of laws belongs undoubtedly to the key competences of an arbitration practitioner (and remains the centre of attention for some authors⁶), it stays outside the main scope of this book, which focuses on interpretation of the substantive rules of law in ICA.

Using the examples of Aristotle’s research for Politics, Solon’s drafting of Athenian laws and the decemvirs’ preparation of the Roman Twelve Tablets, René David and John E. C. Brierley demonstrate that ‘[t]here have always been studies of foreign laws and recourse to comparison in legal scholarship. The comparison of laws, at least in their geographical diversity, is as old as the science of law itself.’⁷ The need for comparative inquiry in both historical and synchronic aspects has always been present in legal studies. In fact, the historical orientation of legal research was the original perspective of modern comparative jurisprudence, influenced by Montesquieu, known as the ‘father of comparative law’.⁸ It is worth noting that in the arbitration literature the term ‘comparative interpretation’ seems to be generally used in a rather narrow sense, to describe the study of similar norms, provisions, instruments and institutions across legal systems, using a contemporary perspective as the point of reference. If comparative legal interpretation sensu largo includes diachronic, as well as synchronic inquiry, in ICA it is the latter that is widely in use.

Another important feature of comparative law is its still often advocated, essentially functional rather than substantive character: it is described as a method of study and research or a technique and not as a branch of law⁹(Harold Cooke Gutteridge even characterizes the term ‘comparative law’ as ‘an unfortunate but generally accepted label for the comparative method of legal study and research’¹⁰). This concept has a long and well-established tradition in legal theory: as Frederick Pollock famously argued at the 1900 International Congress of Comparative Law in Paris, comparative law is nothing more than the introduction of comparative method into law (‘droit comparé n’est pas une science propre, mais n’est que l’introduction de la méthode comparée dans le droit’11).

More recently, Konstantinos D. Kerameus notes the two trends in defining comparative law: as an autonomous (or quasi-autonomous) branch of law and as an auxiliary method used in legal research and reasoning, and he observes that the latter is the dominant one.¹² Thus understood, and traditionally described as close to disciplines such as the sociology of law or legal history, comparative law also enriches the interpretive competences and perspectives of a legal practitioner in a domestic setting. Kerameus observes, though, that comparative law remains a distinctively legal discipline, without a direct recourse to a wider theory of an extralegal field, such as general sociology, history or philosophy.¹³

Adrian Vermeule describes the comparative method, along with direct experiment, as one of the (too rarely used) rational options available for judges faced with the necessity of making interpretive choices in cases of informational uncertainty and limited capacity of processing the accessed data, as they are bound by procedural time frames.¹⁴ Historically, the development of this field of law has been closely connected with the establishment and solidification of modern nation States since the sixteenth century, ‘as a means of understanding (the taxonomic function) and ameliorating national law’,¹⁵ so as to secure its better drafting, organization and understanding. As Gutteridge emphasizes: ‘for the most part applied comparative law has a practical aim in view, such as law reform or the unification of divergent laws, and it is this form of comparative research which is the most vigorous and fertile in output.’¹⁶

Comparative analysis had been thus traditionally perceived as an instrument of improvement of the domestic law. As a result, it was applied in legislative and doctrinal initiatives rather than in legal practice¹⁷(although its essential usefulness for academic inquiry and for judicial interpretation, with its perspective of leading to a ‘droit commun de l’humanité civilisée’ was emphasized as early as 1900 at the International Congress of Comparative Law in Paris¹⁸). In Glenn’s view, such limited perception of comparative inquiry, staying primarily in the service of national legal policy, is no longer compatible with the changing role of States and global legal practice, which includes a growing number of transnational initiatives. The processes of global and regional harmonization of law and their impact on legal interpretation, as well as the increasing transfer of States’ authority in the legal sphere onto transnational institutions (including the creation and broadening of space for private initiatives, such as ICA), have in recent decades accompanied the rapid growth in cross-border economic exchange worldwide.19 Along with internationalization of law firms and augmented mobility in the legal profession, it has resulted in a proliferation of the comparative approach and its wide use in legal practice. International arbitration is, according to Glenn, a striking example of a wide implementation of the reformulated comparative method – being no longer instrumental to the parochial interests of a particular domestic system and exercised only by a narrow group of specialists, but enabling a large number of practitioners to move beyond these limitations.

As Mads Andenas and Duncan Fairgrieve argue, the recent, observable growth of the significance of the comparative method in the practice of domestic courts (as exemplified primarily in the UK context) has already resulted in a variety of outcomes, from overturning authority in domestic context to developing the principles of domestic law and, notably, in the application of European and international law.²⁰ While concluding that ‘[c]omparative law is no longer an impractical academic discipline’,²¹ they also note that the wide expansion of the discipline has been attained at the cost of a loss of consistency, and they call for an accompanying development of legal scholarship.²²

Moreover, whereas the recent growth of transnational legal initiatives in the spheres of lawmaking and dispute resolution is hardly disputable, the ‘decline of the state’²³ seems still to have been announced all too early. As Judd Epstein observes, despite the relatively diminishing significance of State-enacted private law and the increasing role of non-State actors in this area (which leads to the wide applicability of the comparative method in legal practice): ‘the death knell for national law is premature. National law and the national law of others remain prime concerns for the practitioner.’²⁴

This caveat remains adequate on the level of procedural decisions (on which Epstein concentrates), as well as in the sphere of conflict of laws considerations and application of proper substantive law in ICA. While Glenn’s diagnosis of the unprecedentedly high use of the comparative method in legal practice (and notably in the arbitral one) is accurate, his suggestion that it will result in the creation of an amalgam of legal traditions seems too far-reaching. The defining and unifying power of the comparative method (or its appearance) in international arbitration has also been discussed by the critics of ICA as a neoliberal, market-based system of ‘private justice’, founded on what Horatia Muir Watt describes as the ‘myth of a global legal grammar’.25 Correspondingly, comparative law and the comparative method in arbitration (as well as in litigation) can be thus perceived as powerful means of legitimization.²⁶

In fact, the application of comparative analysis in ICA, besides contributing to the development of the new lex mercatoria (or the autonomous, uniform law of the international trade transactions, as discussed in detail in the subsequent chapter) is more diversified and nuanced. It has also undoubtedly already effectively become part of the ‘advocacy tool kit’²⁷ of an arbitration counsel. The outstanding status of ICA in this regard has been acknowledged: ‘international arbitrations are a teeming petri dish for the practice of comparative law. Nowhere is this practice more active than in the advocacy to international tribunals.’²⁸

The indispensable character of comparative analysis in arbitral practice has indeed been emphasized very early – Pierre Lalive perceives training and experience in its use as an essential professional attribute of an arbitrator.²⁹ He also observes that ‘the arbitrator of today must show proof of a comparative or comparatist mind, open to legal pluralism, to various cultures and various political and social systems.’³⁰

Frédéric Gilles Sourgens, adopting the perspective of an ICA counsel, observes that the comparative method in regard to substantive law in arbitration may be used in three basic ways: to present law foreign to the arbitrators in a way persuasive and favourable to his or her case; as an instrument enabling gap-filling in the main proper law of the dispute; and as a means for discovery of general principles of law or usages of the international trade (in other words, the new lex mercatoria).³¹

Whereas the comparative method can be very successfully employed for formulation of the principles of the New Law Merchant (and has, in fact, played a critical role in their consolidation through arbitral case law), lex mercatoria itself and its function in international arbitration is still not tantamount to a particular use of this type of legal analysis. The adoption of comparative method and the role of lex mercatoria in arbitration are certainly close and interconnected. While some authors advocate the concept of the New Law Merchant as a specific method of arbitral adjudication, this pragmatic yet reductionist view seems to leave significant aspects of this legal phenomenon outside the scope of scrutiny. This issue is discussed in detail in the following chapter.

While discussing the input of parties’ counsel into the process of comparative legal analysis before the arbitral tribunal and the decidedly intellectual character of the arguments, Sourgens claims that the arbitration proceedings tend to be, on the average, ‘more precise and reasoned’32 than litigation due to a number of reasons. The specialized expertise of the panel and the limited orality of the proceedings (which leads to the perfection of arguments over the series of exchanges of written documents) are highlighted as crucial in this regard. On the other hand, as the comparative method is used as a tool for the ‘internationalization’ of interpretation of domestic law and making the construction of its rules more befitting the intentions of the parties, the question to be raised is that of limits to such activity. The extremes, to be possibly avoided, are the execution of the assumed parties’ intent to the point of contradiction with the mandatory provisions of the applicable law and hollowing of legal concepts on one side; and a wooden rendition of national rules by purely national interpretive standards, disregarding the cross-border character of the analysed transaction on the other.

The reefs to be steered away from are also legal ‘false friends’ – legal concepts which seem to have direct counterparts in other legal systems, but which cannot be treated as freely exchangeable. A classic example would be the various concepts of domestic contract laws, addressing the issue of unforeseeable changed circumstances (such as Unmöglichkeit, frustration and force majeure,³³ as well as the rebus sic stantibus clauses34), the application of each leading to different practical outcomes. The challenges of legal interpretation in this sphere are thus connected with what Anne Lise Kjaer characterizes, in the example of the EU law, as recontextualization of concepts on a legal and on a linguistic level.³⁵

In the context of arbitral decision-making, a practical limitation to the modifying use of comparative method in interpretation of domestic legal concepts lies also in the actual familiarity of particular arbitrators with the legal system determined as proper substantive law. Whereas it is arguably

not atypical that a tribunal would have at least one member from the jurisdiction of the applicable law. In those cases, counsel must take care that the language used is not only accessible to the arbitrators that are foreign to the applicable law, but also that counsel’s use of language remains plausible within the context of the original normative discourse.³⁶

In this context, the procedural solution introducing limitations on the arbitrators’ nationality (as seen, for example, in the LCIA Rules, Art. 6) should be noted. Whereas arbitration rules, under which the case is being resolved, might prohibit appointment of an arbitrator of the same nationality as any of the parties, it should also be taken into account that the proper substantive law very frequently turns out to be the law of one of the parties. Such a combination will be also present in all cases where, despite the lack of relevant formal limitations, the appointed arbitrators are of a nationality and/or primary educational background different from the domestic legal system determined to be the proper law.

While increasing the neutrality of the forum, this results in a diminished embedment of the tribunal in the national legal system governing the case and the production of a complete world of interconnected legal rules, concepts and interpretive standards. Arbitral interpretation of applicable law in such cases will be thus performed from an outsider’s perspective, with all the positive and negative consequences of assuming such an approach. According to Rene David, ‘ arbitration will hardly be regarded by a party as a suitable way of solving the case if it is to be administered by an arbitrator who is imbued with the ways of thinking and the prejudices of another culture.’³⁷ Such detachment of an arbitrator from the legal system to be applied to the merits of the case bears, however, a risk of misplacing legal concepts with their assumed counterparts, stemmed in systems with which the arbitrator is acquainted.

Another danger is an increased susceptibility to the rhetorical efforts of counsel, offering their arguments in line with the preferred rendition most favourable to the client. As Sourgens observes, the use of the comparative method in the ICA advocacy is threefold. First, it might be performed through seeking a common denominator for legal concepts to be applied with similar concepts present in legal orders with which the arbitrators are directly familiar, as well as a relevant presentation of the argument in so-discovered ‘common legal language’ with which the arbitrators will supposedly find themselves familiar.38 Whereas application of such an approach can be traced and might be helpful and clarifying not just in the counsel’ practice but also arbitral interpretation, the underlying persuasive and rhetorical orientation of the latter serves as a caveat for accepting these kinds of arguments, when presented by the counsel, at face value.

A second, and perhaps less subtle option is the use of analogy for explanation of foreign legal concepts, available in particular on those occasions where the proper substantive law has not been applied to such a type of case before, or where the law is silent or underdeveloped on the matter in question. While similarly, generally practical in arbitral interpretation, it can also be to some extent manipulated in the ICA advocacy. Sourgens notes that, if used cautiously by the counsel, comparative analogy might create a desired effect of establishing a comfort zone for arbitrators not acquainted with the legal system in question, by explaining the unknown through the familiar.³⁹

Third, comparative analysis might be used by the ICA counsel not as a positive strategy, but as a shield, to turn aside the arguments of the opposing side. This can be achieved in regard to an offered, comparative interpretation (to be discredited as inaccurate). In such cases, the negative argument

will focus on the differences between the proposed interpretation and the ‘true’ meaning of the applicable law … [A]t the extreme one could rely on the techniques used by comparative law scholars that see each legal system as a specific answer to problems immanent only within the legal culture of the applicable law. At the other extreme one could simply attack a point as an ill-founded comparison in this specific instance leaving the door open for other, better-formed comparisons.⁴⁰

Another rhetorical variation is the deflection of an argument, which is not itself based on comparative inquiry (but it is being demonstrated that such an inquiry should be arguably taken into account). In both versions, the use of the comparative method for possible rebuttal of arguments on rendition of the substantive applicable law seems very closely connected with the antagonistic character of arbitral procedure and with the practice of ICA advocacy. Its relevance to arbitral decision-making is much less direct: while possibly present in arbitral reasoning (either thanks to the parties’ pleadings or to the arbitrators’ own examination of the law of the case), this kind of comparative counter-argument is rarely explicitly expressed in the issued awards.

Significance ascribed to the use of the comparative method in ICA seems also closely connected to the representation (or self-representation) of arbitration, in the sense proposed by Emmanuel Gaillard,41 as it is adopted (openly or impliedly) by arbitrators resolving a particular case. According to Gaillard, there are currently three dominant conceptualizations of ICA in legal scholarship: one that perceives arbitration as merely an emanation of a national legal order (analogically to private international law understood as part of a given domestic legal system); a pluralistic, multilocal representation, which bases validity of an award not just on the legal order of the seat of arbitration, but on all systems which are predisposed to potentially recognize it; and a theory of ICA as an autonomous, arbitral legal order, where the authority of international arbitrators is not executed on behalf of any State, but is a sui generis, transnational administration of justice.⁴²

These representations have been formulated primarily in a context of procedural framework of ICA and the resulting institutional status and adjudicating authority of the tribunals. However, the assumption of a particular representation of arbitration might result in a different approach adopted towards the use and rank of the comparative method. This issue is further explored below.

Comparative Analysis and the Monolocal Approach

In the first of the analysed representations, the arbitral tribunals are treated as a specialized type of domestic court and the position of an arbitrator is perceived analogically to that of a domestic judge. The rudimentary differences in the limits of discretionary powers are approached as secondary, as in both roles the status of an adjudicator is fully dependant upon the original will of the domestic lawmaker, who allows for such an institutional construct. As pointed out by Francis A. Mann:

[i]s not every activity occurring on the territory of a State necessarily subject to its jurisdiction? Is it not for such State to say whether and in what manner arbitrators are assimilated to judges and, like them, subject to the law? Various States may give various answers to the question, but that each of them has the right to, and does, answer it according to its own discretion cannot be doubted.⁴³

While formulated in what can be seen as an earlier stage of development of international arbitration, this view is still supported by contemporary authors,44