In an old English case [Richardson v. Melish, 2Bing. 228(251) Court of Common Pleas, England (1824)] Judge Burrough stated that public policy is “unruly horse and once you get astride to it, you do not know where it will carry you.” This judge has sufficient reason for saying public policy is unruly horse: case law and scholars have tried to define public policy; but none succeeded in giving a concise, precise, and short definition. Its concept remains controversial.
In English case law from 1853 [Egerton v. Earl of Brown, 4HL 1], House of Lords (the former English supreme court) said that what is denominated is, public policy is the obligations to perform all the duties which men owe to society; and anything having tendency to operate in opposition to that is void.
One scholar articulated that “public policy constitutes general principles of a state that exists in all legal systems, even in the absence of specific rules or judicial precedents to that effect and a principle which may be opposed to the application of any law…” (Pierre Lalive “Transnational (truly international) public policy and International Arbitration” VIII International Congress on Arbitration, New York, May 1986, Congress Series no. 3, Kluwer Law International, 261)
Public policy is held to be superior as it reflects the fundamental interest of the society. When a case is presented before a judge, and if it presumed to violate public policy, then the otherwise applicable law, whether or not foreign, will be disregarded. For example, in case of contracts, contracts that go against morality and law cannot be executed. The standard of morality can be related to public policy that ties the society together.
However, the application of public policy becomes controversial in case of international arbitration. This means that an arbitral tribunal seated in Switzerland may be forced to consider Ethiopia’s public policy. Nevertheless, the criterion for applying public policy of a certain state is ill-defined. The controversy that emanates from public policy gets its shape from the nature of international arbitration.