Arbitration Article An alternative, cheaper and quicker way of dispute resolution

Transcription

1 Arbitration Article An alternative, cheaper and quicker way of dispute resolution

2 An alternative way for solving your problems without wasting your time at courts. A way for solving your problems without large risk for a quarrel at the end of a procedure. We are talking here about arbitration. Arbitration is next to mediation and conciliation an alternative way for private dispute resolution. In this article will be discussed about international arbitration, its laws and rules and their places in arbitration contracts. There will also be distinguished between jurisdiction and the power of an international tribunal. At the end of this article you will be informed about what the benefits of arbitration are, what the rules of arbitration are, and arbitration rules in arbitration agreements and about the power of a jurisdiction and the power of an arbitration tribunal.

3 An alternative, cheaper and quicker way of dispute resolution Arbitration is a Private dispute resolution mechanism, whose outcome is legally binding. An arbitration decision is enforceable with res judicata effect (a matter which is already judged and is no longer a subject to appeal). The difference between arbitration and mediation or conciliation is the fact that mediation or conciliation is assisted by a third neutral party. The third neutral party assists the party by proposing a solution in settlement of their dispute. Another difference between arbitration and mediation or litigation is the benefit that parties can choose a relevant technical expertise to decide their dispute. Parties can choose to be represented by any person of their choice. This person can be a lawyer, a technical person with relevant expertise or a professional body in the jurisdiction where the arbitration proceeding is held. But in mediation or litigation parties are not in a position to check the technical knowledge of the judge and they don t have any input into the judge assignment to hear and make a decision over their dispute. If we are looking to the speed and finality between arbitration and mediation or conciliation, mediation or Litigation takes place before national courts connected to either the dispute or the parties. The power what a judge can order is direct, clear and regulated by applicable rules and the documents and awards are open to public. Meanwhile an arbitral award is final and subject to appeal on only very limited grounds. Parties can arbitrate in any forum of their choice without the necessity of any connection with the forum and an arbitrator may exercise wider powers as conferred on him by the parties. And arbitration documents and awards are private between parties and the arbitral tribunal. After having a look on the difference between arbitration and mediation or conciliation, we can conclude that arbitration has more advantages than mediation or conciliation. But what about the international arbitration procedure laws, rules and the powers of the arbitrators? Let s first have a look on three primary laws, namely the model law, the law of the forum and the New York convention. The model law and the forum law are national laws, but the New York convention is an international convention. Untrical, what is a legal body of the United Nations system in the field of international trade law 1, has drafted a Model law on international commercial arbitration for the international arbitration law members. Model law supplies and represents a modern pro-arbitration legal regime and is a criterion for modern arbitration laws. It is an example or a stencil and has only force in states which has ratified its rules 2. Another primary law in international arbitration law is the law of the place of the arbitration. Parties can make a choice of place for using the law rules of that place. The decision will be written in the arbitration agreement. This choice is called a direct choice. İf there isn t made a direct choice, than there will be made an indirect choice by the arbitral tribunal or arbitral institution. It is also possible to request appointed authorities and national courts to choose the seat of arbitration on behalf of one or both parties in ad hoc arbitral proceedings. Further is the relevant applicable law, the law of the juridical seat and not that of the physical place of arbitration. 1 About Untrical, 2 Chatered Institute of Arbitrators 2012, P 7

4 The third primary law is the international New York convention. The New York convention is made in 1958 and its rules are ratified by at least 149 countries 3. The New York convention regulates the recognition and enforcement of arbitration agreements and foreign arbitral awards 4. Even if the rules of the New York convention aren t stated in a relevant arbitral agreement, the New York convention rules will be recognized and enforced. İt doesn t matter in which state the awards are made, the awards will count in all states which are member of the New York convention. Next to the three primary laws for arbitration agreement, there are arbitration rules. Arbitrational rules are rules that regulate the arbitral procedure. Some standard arbitration rules are followed for Ad hoc proceedings and some rules are draft by institutions self. Institution rules are always reviewed and up-to-date with arbitral practice. There are cases that institutions can choose to use their own arbitration rules in Ad hoc proceedings. These two options must both operate within the context of the applicable procedural law. Some arbitration institutions can act as appointing authorities in Ad hoc proceedings. In cases like this parties are free to manage their rules. Most time UNTRICAL rules, adopted in1976 by the general Assembly of the United Nations, are chosen. Beside arbitration rules parties can choose for Soft rules. Soft rules have a persuasive force which only can have a legal force if parties will incorporate them in their arbitration agreement. Another soft rule is the uncitral note, which is drafted as assistance for parties and arbitrators in Ad hoc proceedings. These notes can be taken in consideration by the institutions during the time parties are drafting their own rules. Third soft rule is the Codes of Ethics, which is not yet universally recognized as a way of arbitration rule. A forth kind of soft rule is the IBA (Internatıonal Bar Association) guideline. The IBA guidelines are Conflict Guidelines which can be very important for parties during the procedure. These guidelines contain the way of solving conflict situations. These guidelines are so important that many tribunals are inspired by these rules for creating evidentiary rulings. To use these guidelines it must be agreed by the parties and adopt in the arbitration agreement. Next to arbitration rules for arbitration agreements and rules for arbitration procedure, it is also important to take a look on the power of a jurisdiction and the power of an arbitration tribunal. Jurisdiction means the public power law of the government, which is fully accepted by most national arbitration laws. In such cases arbitrators are empowered to determine their own jurisdiction. The determining of own jurisdiction with national courts has the ultimate power to adjudicate that decision on appeal 5. A party can contest the jurisdiction over the subjective arbitrability or the objective arbitrability before the arbitral tribunal in the first instance 6. The arbitral tribunal, which has a power to decide, derives its jurisdiction from the parties who submitted the dispute to that tribunal. The tribunals actions are invalid without jurisdiction. According to the doctrine of severability, the arbitration agreement contained in a contract can survive the invalidity or termination of the contract so that the jurisdiction it covers on the tribunal allows the tribunal to decide on the consequences of that invalidity 7. If we are talking about the competence to determine jurisdiction, the arbitral tribunal determines and rules its own jurisdiction over a particular arbitral dispute 8. An example of the power of the arbitral tribunal is the decision or the validity of an arbitral agreement 9. A national court has ultimate control. If for example a party is dissatisfied with the 3 The New York convention, 4 Chatered Institute of Arbitrators 2012, P 9 5 Chatered Institute of Arbitrators 2012, P 23 6 Chatered Institute of Arbitrators 2012, P 23 7 Fordham International Law Journal 1994, P 6 8 Chatered Institute of Arbitrators 2012, P 23 9 Model law Article 16.1

5 arbitral decision on his own jurisdiction, without using the waiving right of challenge, the party has the right to challenge the arbitral tribunal s decision in a relevant national court 10. A decision of the national court is a final determination of the issue and most often not subjected to appeal 11. The arbitral tribunal renders a final award on the substantive issues in dispute between parties at the end of an arbitral proceeding 12. The losing party can take a spontaneous execution. If they don t, the winning party may seek recognition with or without assets of enforcement against the action. A party may also seek recognition of a declaration award or to ensure that a finality of the decision in the award is achieved giving the issues a res judicata effect 13. So if you want an alternative, cheaper and quicker way of dispute resolution, then choose arbitration. 10 Chatered Institute of Arbitrators 2012, P Model law Article Chatered Institute of Arbitrators 2012, P Chatered Institute of Arbitrators 2012, P 24

6 Bibliography Klukowskı, Kenneth A. Severabılıty Doctrıne: How much a statute should federal courts ınvalıdate?, University of Notre Dame 2008 No writer. Untrical Model Law. consulted on December 10, Onyema, Dr Emillia. Introduction to international Commercial Arbitration. Chartered Instıtute of Arbitrators, London 2010.