120 3. Application by international arbitral tribunals
It has been outlined above that international arbitral tribunals have no lex fori and cannot be considered as representatives of a particular legal order. Thus, from a formal point of view they cannot be regarded as judicial authorities of the IMF member countries in the proper sense. These formal differences between adjudication by domestic courts and by international arbitral tribunals notwithstanding, international arbitrators have to apply Art. VIII Sec. 2 (b) of the IMF Agreement . The nature of this duty as a general principle of international arbitral practice has been repeatedly emphazised in the case law of the Iran-US Claims Tribunal in The Hague. In the Mark Dalal Award the Tribunal stated that:
»Strong reasons suggest that also international tribunals should respect the relevant provisions of the IMF Agreement...the language of the IMF Agreement imposes on courts and administrative authorities, as well as on international tribunals, not only a right but a duty to refuse enforcement of exchange contracts, including capital transfers, falling under the provision of Article VIII Section 2 (b) of the Agreement«.
The international arbitrators' duty to apply Art. VIII Sec. 2 (b) of the IMF Agreement follows from the substantial economic significance and lex specia-121
lis-function of that provision and its worldwide recognition among more than 150 member countries of the IMF. This worldwide recognition accounts for the fact that the distribution of the exchange control risk embedded in this provision has become part of transnational economic law, the modern lex mercatoria . This view is also supported by the fact that according to modern arbitral doctrine, international arbitrators assume a genuine judicial function that is equivalent to that of domestic courts . From this functional perspective, international arbitral tribunals must be regarded as judicial authorities that are called upon to enforce the values and policies that stand behind Art. VIII Sec. 2 (b). Finally, the arbitrator who disregards Art. VIII Sec. 2 (b) would risk the setting aside of the award before domestic courts which will consider Art. VIII Sec. 2 (b) to be part of the ordre public international . As in the case of domestic exchange control regulations , outright disregard of Art. VIII Sec. 2 (b) of the IMF Agreement by international arbitrators would do severe damage to the worldwide credibility, reliability and viability which the international arbitral process has assumed in the past. Application of the provision therefore is part of the international arbitrator's incrceased responsibility for the arbitral process as a whole. For these reasons, the arbitrator has to take account of Art. VIII Sec. 2 (b) even if the conflict of laws rule of the lex arbitri gives him wide discretion in the determination of the law applicable to the substance of the dispute (»voie directe«) .
In spite of this rather clear legal situation the applicability of Art. VIII Sec. 2 (b) of the IMF Agreement is often overlooked in international arbitral practice .