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Role of International Commercial Arbitration

Info: 1961 words (8 pages) Law Essay
Published: 6th Aug 2019

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Jurisdiction(s): International Law

International commercial arbitration refers to the process of solving international commercial disputes among parties from different countries through the services of specially appointed arbitrators by the disputing parties themselves instead of through courts. [1] Before going into mechanism of arbitration and other features associated with it in the following literature review, this brief overview is to explain the purpose of the proposed research. The question is that in spite of all the good intentions or laudable principles of international commercial arbitration, whether international arbitral awards can be successfully enforced. Are they being successfully enforced in reality or whether the robustness of arbitration is only in theory and not in practice. In order to arrive at an answer, an extensive research is required. An in-depth reading of the U.K.‘s Arbitration Act 1996 is essential. [2] A tentative plan of research on the relevant topics for the purpose is detailed below.

What is International Arbitration, Characteristics of Commercial Arbitration and special characteristics of International Commercial Arbitration.

Legal framework for International Commercial Arbitration

International Agreements, Conventions, and Treaties.

Advantages and disadvantages of international arbitration

Choice of Law in International Commercial Arbitration

UNICITRAL , Enforceability of International Arbitration Agreements

Regional Multilateral Treaties, Bilateral Investment Treaties

Arbitral Institutions – International such as International Chamber of Commerce International Court of Arbitration, London Court of International Arbitration, International Centre for Settlement of Investment Disputes and others

Case law: leading international cases on choice of law, enforceability, substantive law, procedural law, impartiality of arbitrators etc.

Critical analysis and conclusion on the effectiveness of enforceability of international arbitral awards [3] , [4]

The above topics are only indicative and not exhaustive. Naturally, it is only during the course of research process some of the above may become unnecessary and some more new issues will emerge and hence the above draft table of contents is only provisional.

A summary of argument or hypothesis or what will the research prove

The proposed research will trace the history of development of arbitration both in national forums as well as international forums. Basically, arbitration’s main aim is to relieve disputing parties of court procedures which are time consuming and conducted strictly according to rules. This is not conducive to commercial disputes since in business time is money. More so in the international business contracts where parties’ stakes are precariously involved. It does not mean arbitration is entirely informal and conducted in a hawkish manner. The parties are free to choose their own judges who will in turn select a chief arbitrator thus avoiding a possible tie. Otherwise, a sole arbitrator acceptable to the disputing parties maybe appointed. In either case, the arbitrators are expected to be impartial in the conduct of the arbitral proceedings. Reference to arbitration is governed by arbitration clause in the contract under dispute. A contract becoming disputed does not render the arbitration clause unenforceable. Since the parties are from different nations, question would arise as to which country’s law would govern the contract. The arbitral seat need not necessarily be in either of the countries but in an altogether a different country. If latter be the case, the issue becomes even more complex as to which country’s procedural law would be applicable. The choice of law would also depend on the place of execution of contract. Still the question remains, how the arbitral award would be enforced. This is precisely the area with which this proposed research is concerned with. The arbitral laws should ensure that arbitral award must be capable of being enforced in the country in which the party liable under the award is located or where the parties’ assets are held. Enforceability also would depend on the finality of the award since in cases of question of substantive law, the aggrieved party could appeal against the award. Again the question arises as to how far the party liable can frustrate the enforcement of the award under some pretext or other. Enforcement of the award is crucial as otherwise the whole purpose of arbitration becomes a futile exercise. Therefore, the proposed research is expected to prove that arbitral laws are in place to ensure enforceability of arbitral award.

Literature Review

This section will serve as a brief outline of the proposed research in order to show that the proposed research is in the right direction and will arrive at an answer for the research question.

Before the question of enforcement of award is considered, enforceability of arbitral agreement is of foremost importance. Hence enforceability of arbitration agreement and final award are equally important. National courts readily, broadly and quickly examine and interpret the agreements and order parties to submit to arbitration proceedings. The enforceability of arbitral agreement becomes comparatively easier in the case of New York Convention as more than 135 countries are signatories to it. [5] The national arbitration legislations mostly based on UNICITRAL Model law provide for enforceability of international arbitration agreements and awards. [6] . Forum selection is another issue. [7] Though there are industry specific arrangements and regional forums, New York Convention has been the more widely preferred forum. [8] Some States restrict forum selection by requiring reasonable relationship between parties of the contract and the forum selected. [9] New York Convention facilitates enforcement of international arbitration awards through conducive national arbitration legislation in the member countries. On the whole, pro-enforcement regime is in place except for limited grounds under which recognition of an arbitral award can be denied. In the developed countries, there is positive track record of successful enforcement of international arbitral awards. [10] Enforceability of arbitral award has been receiving greater attention so as to not to defeat the purpose. Professor van den Berg says that it is crucial that international arbitration awards should be enforced promptly. The main purpose of New York Convention has been to promptly enforce international arbitration awards. It is the ability to enforce the awards which largely enhances the image of international arbitration as a dispute resolution mechanism. This is the only way by which international trade and investment can be protected. It is the case of van den Berg that in the matter of settlement of international disputes, international arbitration has more advantages than through litigation in national courts. For a business man, a foreign court can prove to be alien [11] as he cannot be familiar with the procedures of the foreign court as also law to be applied. Even the mentality of foreign judges cannot be predicted compared to the arbitrators who can ensure application of mutually acceptable procedure and law. The parties can be sure of law that will be applied. Most importantly the parties can appoint experts in the relevant field of knowledge as arbitrators. [12] The arbitrators are duty bound to make an award that is enforceable. In fact, some institutional rules are explicit about this obligation on the part of arbitrators. For example, the LCIA rules stipulate that the LCIA Court, the Arbitral Tribunal and the parties shall make every effort to ensure that an award is legally enforceable. ICC Rules also state that court and the Arbitral Tribunal should render an award that is enforceable at law. However, an arbitrator is not bound to guarantee an enforceable award nor is there any liability attached on him. It should be ensured that arbitration agreement should be valid and subject matter should be arbitrable. [13] The New York Convention is credited with making it easier to enforce an arbitration award than a foreign court judgment. An indirect advantage of ready enforceability of an award is to force parties to come forward for a negotiated settlement. This obviates the need for a decision to be made or if the decision is made, voluntary compliance obviates the need for enforcement. [14] Thus, enforceability of award makes the arbitration procedure the most ideal for quicker settlement of disputes. [15]

Why the proposed dissertation will be suitable for research for LLM degree

The above literature review seems to indicate that enforceability of awards is possible or practicable. But it requires great alacrity on the part of the arbitrators to apply the correct substantive law, procedural law, interpretation of the arbitration agreement in order to render an award enforceable. But the question remains whether an award will be still enforced in spite of there being no technical flaw in the award. Arbitrators may not be at fault nor is the award defective. It still requires the will of the court concerned to give effect to the award. Hence, this subject is not as simple as it may seem. One has to make an intensive research to arrive at a conclusion whether or not the present arbitration legislations are conducive for enforcement of arbitration award. In theory, it may seem rosy enough. The case law is likely to give altogether a different picture or mixed result. Hence, it is felt that the proposed topic of research is worthy of a level as high as an LLM degree.

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