Could International Arbitration Become a Tool to Pressure National Sovereignty?

By. Rodolfo Milesi.

The international arbitration system, originally conceived as a neutral avenue for resolving cross-border commercial disputes, is in constant danger of being hijacked by corporate interests. An increasing area of abuse is requests for the recognition and enforcement of arbitral awards which have been set aside or stayed by the curial courts, creating expensive and unfair forum shopping exercises.

It is in the interests of all parties using arbitration as a dispute resolution mechanism that key international tribunals, particularly those based in major financial centres such as London, Paris and Singapore, uphold the jurisdiction of curial courts and apply public policy grounds for refusing recognition and enforcement. Courts in these financial centres generally uphold high standards in this regard. Cases where enforcement was denied due to conflicts with public policy or fundamental local legal principles include Payward, Inc & Ors v. Chechetkin(2023) and Kabab-Ji SAL v. Kout Food Group (2021). They illustrate instances where courts have had to intervene due to concerns about the compatibility of certain arbitral decisions with essential legal standards.

International courts have also played a positive and essential role by ensuring appropriate legal protection and fairness in cross-border disputes. For instance, in National Joint Stock Co Naftogaz of Ukraine v. Public Joint Stock Co Gazprom (2019), the English court ordered a temporary suspension of the recognition of the arbitral award while the curial court conducted a thorough review, thus ensuring a fair and transparent process. Another example is Hulley Enterprises Limited v. The Russian Federation (2021), in which the English court ordered a suspension without imposing excessive financial guarantees, prioritizing a balanced approach to international justice. Moreover, more recently in Paris (2025), the International Court of Arbitration rejected a request to transfer an arbitral case to France, ruling that such a move would violate the original terms of the contract, demonstrating a strong commitment to honouring prior agreements and contractual integrity.

Despite the risk of abuse, these examples show that the international arbitration system contains effective mechanisms for safeguarding the core principles of justice and fairness in dispute resolution. These mechanisms should be strengthened in ways that preserve legal certainty for investors while protecting countries from the loss of regulatory autonomy or undue pressure from multinational corporations.

That requires ongoing dialogue between national governments and major international arbitration centres to ensure these mechanisms are used fairly and transparently.

It is crucial to foster a balanced debate on how to ensure that international arbitration remains a legitimate and effective tool for resolving commercial disputes, without compromising the sovereignty and regulatory capacity of the nations involved.