Nullity Due to Defective Rationale? A Critique of the Peruvian Judicial Practice of Annulling Awards Due to Defects in the Reasoning

Abstract

In this essay, the author critically examines the judicial practice observed in Peru concerning the annulment of arbitral awards on the grounds of lack of reasoning or merely apparent reasoning. Drawing upon the most widely accepted principles of arbitration law, both domestic and international, the author concludes that the prevailing judicial practice is inconsistent not only with best judicial practices in this field but also with arbitration law itself. Arbitral awards have the effect of res judicata, meaning that their substantive content is not subject to judicial reconsideration. A specific implication of this principle is that the reasoning of an award may be reviewed only as to its existence, but not as to its substantive merits. The prevailing practice, however, shifts from an inquiry into the existence of reasoning to an assessment of its substance. In doing so, it misapplies arbitration law, undermines the effectiveness of arbitration, and weakens the binding force of res judicata.