International arbitration
From Wikipedia, the free encyclopedia
International arbitration is the established method today for resolving disputes between parties to international commercial agreements. As with arbitration generally, it is a creature of contract, i.e., the parties' decision to submit any disputes to private adjudication by one or more arbitrators appointed in accordance with rules the parties themselves have agreed to adopt, usually by including a provision for the same in their contract. The practice of international arbitration has developed so as to allow parties from different legal and cultural backgrounds to resolve their disputes, generally without the formalities of their underlying legal systems.
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[edit] Main Features of International Arbitration
One of the distinguishing characteristics of international arbitration (as opposed to the many domestic variants that exist in virtually all of the world's industrialized countries) is that it is not tied to a particular legal procedure or practice, unless the parties desire it to be so. Rather, international arbitration is correctly described as a hybrid form of dispute resolution, and a good example of its hybrid nature can be found in the International Bar Association (IBA)'s Rules on the Taking of Evidence in International Commercial Arbitration.[1] These rules do not adopt either the broad disclosure (discovery) procedures of the world's common law jurisdictions, nor do they limit or eliminate the ability to engage in disclosure-related practices, which would be expected in civil law jurisdictions. Rather, they seek a middle-ground that allows for flexibility, and contemplates disclosure occurring where it is relevant to the adjudication of issues in dispute. David Rivkin[2], who chaired the committee that drafted the rules, has noted that the wide adoption of these rules in international arbitration has led in practice to an unexpected use by common law practitioners to limit disclosure and by civil law practitioners to expand it.
The rules of evidence is just one example of the different practice that applies to international arbitration, and which distinguishes it from provincial forms of arbitration rooted in the procedures of a particular legal system. Similarly, international arbitration practice has given rise to its own non-country specific standards of ethical conduct which are believed to apply in international proceedings and, more to the point, to the arbitrators who are appointed to conduct them.[3]
[edit] Differences with Domestic Arbitration and Mediation
International arbitration is a significant variant of the practice in many countries of arbitration, from which it is derived and shares many features. It is not just the fact that international arbitration arises in the context of international contracts that makes it different. In the international dispute resolution community, it is widely accepted to be a different animal entirely, involving different practices and rules, and being represented by a different community of arbitrators and legal practitioners.
Although the procedural laws of many countries provide for "international" arbitrations to take place, an "internationalized" form of a provincial or domestic arbitration practice should not be confused with genuine international arbitration, which can be fairly said to exist outside and beyond the rules of any particular jurisdiction. (See Redfern, Hunter, Blackaby & Partasides, Law and Practice of International Commercial Arbitration (2004), at 1-21, "an international arbitration will usually have no connection with the state in which the arbitration takes place, other than the fact that it is taking place on the territory of that state.").
In the international context, it is also worth making a firm distinction between Arbitration and Mediation, which are both sometimes characterized as forms of ADR (Alternative Dispute Resolution). In countries where mediation is new or struggling to be introduced as a concept, this association has given rise to the misleading impression that mediation is a form of non-binding arbitration, with the arbitrator "proposing" or suggesting outcomes based on an assessment of the parties' rights. In fact, arbitration and mediation are fundamentally different: the former is a determination of legal rights, the latter a form of facilitated negotiation which looks beyond rights and allows the parties to focus on their underlying interests. The one leads to a binding determination (arbitration), the other only in the event the parties agree to settle their dispute on mutually satisfactory terms (mediation).
[edit] The Advantages of International Arbitration
For international commercial transactions, parties may face many different choices when it comes to including a mechanism for resolving disputes arising under their contract. If they are silent, they will be subject to the courts of wherever a disaffected party decides to initiate legal proceedings and believes it can obtain jurisdiction over the other party. This may not sit well with parties that need to know at the time of entering into their contract that their contractual rights will be enforced. The alternative to silence is to specify a method of binding dispute resolution, which can be either litigation before the domestic tribunal of one of the parties or arbitration. If the parties choose to resolve their disputes in the courts, however, they may encounter difficulties. The first is that they may be confined to choosing one or the others' courts, as the courts of a third country may decline the invitation to devote their resources to deciding a dispute that does not involve any of that country's citizens, companies, or national interests. The second, and perhaps more significant difficulty, is that judicial decisions are not very "portable" in that it is difficult and sometimes impossible to enforce a court decision in a country other than the one in which it was rendered.
[edit] Neutrality and Enforceability of Arbitration Awards
The ability to resolve disputes in a neutral forum and the enforceability of binding decisions are often cited as the main advantages of international arbitration over the resolution of disputes in domestic courts. And there is solid legal support for this view. An international award originating in a country that is a party to the New York Convention of 1958 may be enforced in any other country that is also a signatory, as if they were rendered by domestic courts. Here is an example of this important concept: assume that parties from countries A and B have agreed to resolve their disputes in country C, and all three countries are parties to the New York Convention. This will mean that even though the arbitration will take place in country C, the resulting award can be enforced in the countries A (or B), as if it were a court decision rendered in the domestic courts of that country. (By contrast, there is no equivalent treaty for the international recognition of court decisions.)
Thus, parties to international contracts can decide to site their disputes in a third, neutral country, knowing that the eventual award can be easily enforced in any country that is a signatory to the New York Convention, which has been ratified by a significant majority of commercial nations, with notable exceptions like Qatar and Brazil, which not having ratified the New York Convention cannot be assumed to give effect to arbitration decisions rendered in other countries. An international award therefore has substantially greater executory (legal) force than a domestic court decision.
[edit] International Commercial Arbitration
The resolution of disputes under international commercial contracts is widely conducted under the auspices of several major international institutions and rule making bodies. The most significant are the International Chamber of Commerce (ICC), the International Centre for Dispute Resolution (ICDR), the international branch of the American Arbitration Association), the London Court of International Arbitration (LCIA), and the Singapore International Arbitration Centre (SIAC).
[edit] International Investment Arbitration
The last few decades have seen the promulgation of numerous Bilateral Investment Treaties, as well as Multilateral Investment Treaties, all commonly referred to as BITs, which are designed to encourage investment in signatory countries by offering protections to investors from other signatory states. One of the significant feature of BITs is that they provide investors with the ability to resolve disputes with the host states before the International Centre for the Settlement of Investment Disputes (ICSID).
[edit] See also
- American Arbitration Association
- London Court of International Arbitration
- International Chamber of Commerce
- International Centre for the Settled of Investment Disputes
- International Bar Association
[edit] External links
[edit] International Arbitration Resources
- Kluwer International Arbitration
- International Commercial Arbitration Resources
- http://www.transnational-dispute-management.com (also with access to OGEMID, internet discussion forum on international dispute resolution, in particlar investment disputes)
- Investment Treaty News ITN is a free electronic reporting service dedicated to reporting on investor-state lawsuits arising under investment treaties)
