International commercial arbitration

A. Arbitration

Without dispute, there is no arbitration. In the legal sense, arbitration is one of the techniques used in dispute resolution where cases are decided out of court. Compared to a normal court case in which a judge or jury decides the case, the arbitral tribunal reviews the dispute and issues the decision. Arbitration has the following characteristics: it is consensual, it is neutral, the procedure is confidential, the arbitrators are personally chosen by the parties and their decision is final and easy to execute.

1. International commercial arbitration

1.1 In general

International commercial arbitration or international arbitration involves the resolution of disputes or cases related to international commercial contracts that are generally celebrated between large corporations or international institutions or the government of different countries of the world. The resolution of these contractual disputes is the responsibility of the International Chamber of Commerce or ICC, the American Arbitration Association (its international branch), the International Center for Dispute Resolution or the ICDR, the Hong Kong International Arbitration Center, the London Court of International Arbitration or the LCIA, the World Intellectual Property Organization or WIPO and the Singapore International Arbitration Center or SIAC, as the case may be.

International commercial arbitration is considered a hybrid dispute resolution due to the versatility of its arbitration procedures. Arbitration procedures can use a combination of common law and civil law whereby the ability to resolve a case becomes more achievable and successful. An important reason many parties refer a case to arbitration is to avoid the litigation practices of local courts in different jurisdictions. Other reasons include: obtaining a more efficient and personalized decision, having expert arbitrators in the field and the freedom to select and design the arbitration process itself, considering the flexible characteristics of the procedure.

1.1 Why international commercial arbitration?

The advantages of resorting to international commercial arbitration can be summarized as follows:

1. The ability to choose a specific method of resolving the dispute that is fair to both parties, especially if they are from different countries where litigation and other legal complexities could hinder the resolution of your case;

2. Enforceability and neutrality are the basis for resolving the dispute. Decisions become binding on both parties. The legal basis for the recognition of the arbitration award is the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 or also known as the New York Convention;

3. The arbitrators, chosen by the parties, are well known for their competence in their field; and

4. Confidentiality of the procedure. The judicial processes and decisions are public. The arbitration process is cloaked in confidentiality and therefore appeals to those who do not want the agreement disclosed. Most, if not all, of the arbitration awards have not been made public or have not been made public.

B. United Nations Commission on International Trade Law (UNCITRAL)

1. General Information

The growing popularity of international commercial arbitration led to the creation of the United Nations Commission on International Trade Law or UNCITRAL in 1966 with the aim of promoting progress, unifying and harmonizing international trade law.

In the area of ​​international business transactions, UNCITRAL helps formulate different models of rules, laws and conventions that are accepted around the world. The agency also helps provide legislative and legal guidance and recommendations and updates information on jurisprudence and uniform enactments of commercial law. In addition to these, seminars related to uniform commercial law are held periodically and technical assistance is provided to different legal reform projects.

2. UNCITRAL Arbitration Rules

The UNCITRAL Arbitration Rules are a comprehensive compilation of procedural rules that are chosen by the parties to guide the conduct of their arbitration proceedings. These rules include the arbitration process (which provides a model arbitration clause), the rules for the election of arbitrators and the conduct of the procedure, and the rules on the form, effect, and how the arbitration award is interpreted.

The UNCITRAL arbitration rules were adopted in 1976 * in order to guide the parties in the arbitration procedure without recourse to an international arbitration institution. In 2006, the UNCITRAL Model Law was passed. Many countries around the world used this model for their own arbitration law. This 2006 review was intended to accommodate changes in arbitration practices over the years.

C. Concepts

1. Applicable law

The arbitral tribunal is the third party in the arbitration process. As such, the law of the country or national law where such court is located governs the arbitration procedure rules unless both contracting parties have stipulated and agreed to a different jurisdictional law. Because the arbitration agreement is a contract in nature, the parties can provide the provisions of the agreement.

2. Arbitration clauses

Arbitration arises as a result of a dispute in a master contract. Whenever a dispute arises and in the absence of a stipulation, the case will proceed to court and the tedious litigation process will begin. Most of the time, irreconcilable legal and jurisdictional discrepancies arise that make the case more complicated to carry out. To avoid this, an arbitration clause should be incorporated into the main contract. In the drafting of this clause, the parties may resort to the samples provided by the different arbitration institutions.

The important elements that an arbitration clause must include are: that both parties agree to arbitrate, the scope and definition of the disputes that will be the subject of the arbitration proceedings, the method of selecting arbitrators, the place or headquarters of the arbitration, and that the parties are willing to adapt to the arbitration rules that may be institutional or ad hoc. These provisions, although mandatory, are not mandatory and the parties may stipulate other provisions that benefit them, such as the provision of more than one arbitration institution.

3. Decisions and awards

One of the main reasons that parties resort to arbitration is because judgments and decisions are easier to enforce. However, it is worth noting that due to the confidential nature of the arbitration process, including the final results of the case, these decisions are not made public. As the decisions are not published, there is not much that can be researched about the process and its results.

D. Arbitration institutions

1. Ad hoc arbitration

Ad hoc arbitration allows the contracting parties to plan and organize their own arbitration process. This includes the selection of arbitrators, the specification of the rules of procedure and other laws, the definition of the powers of the arbitral tribunal, and the like. All of these provisions not otherwise contained in a general arbitration agreement must be expressly provided.

However, this method is not without its drawbacks. Ad hoc arbitration can result in the parties not cooperating, especially if the case turns into a tedious dispute. Likewise, starting the arbitration process may take some time considering that it does not have a regulation or procedural structure similar to that of institutional arbitration.

E. Institutional arbitration

Institutional arbitration refers to arbitration in general. It does not allow the parties to define the rules. An arbitration institution establishes the rules of procedure, as well as performs administrative and supervisory functions that may include following the procedures through a schedule. The only participation of the contracting parties in this situation is choosing the international arbitration institution that will handle the case.

F. Conclusion

Globalization has in some way contributed to the impact of resorting to international commercial arbitration on the regular litigation process. Global trade has made this method of dispute resolution the preferred form, especially since the process is basically private and confidentiality is highly recognized, especially in the determination of the arbitration award.

International investments and ongoing trade between different countries drives the need for the parties to recognize the importance of international commercial arbitration as part of their main contracts. While the issue of jurisdiction is and will always be a problem, there are a growing number of states that continually enact and amend their own arbitration rules to adapt to changing times.