International Arbitration

   

   

   What is international arbitration?

   Arbitration is a system of formal dispute resolution by one or more impartial persons
   (arbitral tribunals) for final and binding determination. The arbitral tribunal can be made up
   of legal and/or industry experts of the parties' own choosing, using procedures which they can
   influence. Arbitration is a private and confidential process and can provide for the quick,
   practical, and economical settlements of cross-border disputes.

   Arbitration is particularly common in commodity, insurance, construction, engineering, oil,
   gas and shipping contracts. The insertion of an arbitration clause into commercial agreements
   enables businesses to opt to have disputes arising in connection with the contract to be
   decided by arbitral tribunals rather than litigating them in national courts.

    Of the many available dispute resolution alternatives available, it is by far the most
   commonly used internationally. Each jurisdiction will have its own separate arbitration laws,
   but with the existence of international conventions eg. the 1958 United Nations Convention on
   the Recognition and Enforcement of Foreign Arbitral Awards (the "New York Convention") and
   international organisations such as the ICC; UNICITRAL and AAA which provide arbitration rules
   and procedures to suit international disputes, there is a greater ease of recognition and
   enforcement of arbitral awards.

   

   

   Advantages of arbitration

     o Final & binding - while other forms of ADR can help parties reach an amicable settlement
       (eg. mediation) they are not necessarily final and binding, in particular, in respect of
       cross-border disputes. Arbitral awards are not subject to appeal and are much more likely
       to be final than the judgements of courts of first instance. Although arbitral awards may
       be subject to being challenged (usually in either the country where the arbitral award is
       rendered or where enforcement is sought), the grounds of challenge available against
       arbitral awards are limited.
     o Greater enforcement - arbitral awards have much greater and easier international
       recognition than judgements of national courts. Over 130 countries have signed the New
       York Convention. The Convention facilitates enforcement of awards in all contracting
       states. There are several other multilateral and bilateral arbitration conventions that
       may also help enforcement.
     o Equal footing - by entering into an arbitration agreement, parties can place themselves on
       an equal footing in respect of the place of the arbitration; the language used; the
       procedures and rules to be applied; nationality and legal representation. Arbitration may
       take place in any country, in any language and with arbitrators of any nationality. With
       this flexibility, it is generally possible to structure a neutral procedure offering no
       undue advantage to any party.
     o Expertise - arbitration allows the parties to appoint the persons of their choice as
       arbitrators, provided they are independent. This enables the parties to choose arbitrators
       who have specialised competence in the relevant field.
     o Speed and economy - arbitration is usually faster and less expensive than litigation in
       the courts. Although a complex international disputes referred to arbitration may
       sometimes take a great deal of time and money to resolve, the limited scope for
       challenging arbitral awards, as compared with court judgements, means that the parties
       will not subsequently be entangled in a prolonged and costly series of appeals.
       Furthermore, arbitration offers the parties the flexibility to set up proceedings that can
       be conducted as quickly and economically as the circumstances allow.
     o Confidentiality - arbitration hearings are not public, andonly the parties themselves
       receive copies of the awards.

   

   

   Should an arbitration be on ad hoc basis or referred to uninstitutional arbitration?

   

   Parties using arbitration have a choice between designating an institution, such as ICC, to
   administer it, or proceeding ad hoc outside an institutional framework.

   In ad hoc cases, the arbitration will be administered by the arbitrators themselves. However,
   should problems arise in setting the arbitration in motion or in constituting the arbitral
   tribunal, the parties may have to require the assistance of a state court, or that of an
   institution.

         Although an institutional arbitration requires payment of a fee to the administering
   institution, the functions performed by the institution can be critical in ensuring that the
   arbitration proceeds to a final award with a minimum of disruption and without the need for
   recourse to the local courts.

   The services an institution may offer include:

    1. Determining whether there is a prima facie agreement to arbitrate;
    2. Appointing arbitrators;
    3. Deciding challenges against arbitrators;
    4. Determining the place of arbitration;
    5. Fixing and extending time-limits;
    6. Determining the fees and expenses of the arbitrators;
    7. Scrutinising arbitral awards.

   

   

   Costs

   In most instances it will be the arbitral tribunal which decides which of the parties are to
   meet the costs of the arbitration (and in what in what proportion), including the fees and
   expenses of the arbitrators and any tribunal appointed experts.

   The precise rules on costs will however depend upon the governing rules of the arbitration and
   any agreement made by the parties prior to the arbitation.

   Enforcement of arbitral awards Provided that the country in which the arbitral award is to be
   enforced is a signatory of the New York or Rome Convention, enforcement of the arbitral award
   will be through the localcourts.

   

   

   When may arbitration be appropriate?

     o Where the parties are looking for a neutral forum because the courts which otherwise may
       have jurisdiction may not be viewed as being totally independent.
     o Where the relevant country's legal system is underdeveloped or ill-suited to deal with the
       dispute.
     o Where the parties want the dispute to be resolved by an expert relevant to the dispute.
     o Where litigation through the courts may be lengthy and costly.
     o Where the parties want to be have some control over the procedure for resolving the
       dispute eg. the time of the hearing; the documents to be submitted to the tribunal and the
       language adopted.
     o Where the decision will not be made in the same place that the debtor's assets are to be
       found eg. The New York Convention has established an effective and widely accepted scheme
       for the enforcement of foreign arbitral awards which has a wider geographical scope than
       courtbased systems.
     o Where a final and binding decision is required with a minimum, or no right of appeal;
     o Where confidentiality is required;
     o Where state parties are involved, there can be a reluctance by such parties to submit to
       the jurisdiction of a foreign court.