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The majority of international transactions are carried through without any dispute arising
Different processes for settling commercial disputes whether domestic or involving an international dimension
From informal processes to highly regulated lawsuits
Alternative dispute resolution procedures
Methods of dispute resolution
It is often of great importance to know whether a given procedure amounts to “arbitration”
New York Convention, provides “Each Contracting State shall recognize an agreement in writing under which the parties undertake to submit to arbitration.
Arbitration
Its principal characteristics are:
- arbitration is a mechanism for the settlement of disputes;
- arbitration is consensual; - arbitration is a private procedure; - arbitration leads to a final and binding determination of the rights and obligations of the parties.
Nevertheless, some content must be given to the term
If there is no dispute, there can be no arbitration.
The issue arises most often when one party fails to perform obligation.
In arbitration is common for the parties to settle their dispute after the arbitration has commenced.
There is no longer any dispute for the arbitral tribunal to consider.
Arbitration is a mechanism for the settlement ofdisputes
An arbitration must be founded on the agreement of the parties.
It also means that the authority of the arbitral tribunal is limited to that which the parties have agreed.
Most arbitration agreements are in the form of an arbitral clause in the principal contract.
The arbitral clause will provide for the settlement of disputes that may arise in the future.
An arbitration is consensual
Arbitration is not part of the State system of courts.
The end result is an award, enforceable by the courts, usually in same or similar procedure as a court judgment
State has an interest in the conduct of arbitration. Why?
The current trend is to allow the parties and the arbitral tribunal full autonomy obliged only on:
“The parties shall be treated with equality and each party shall be given a full opportunity of presenting his case.
Arbitration is a private procedure
International commercial arbitration was traditionally between two commercial companies that could have settled their dispute by negotiation or other private and confidential means
It was understood that neither the parties, arbitrators, witnesses, experts nor any supporting personnel would reveal anything about the arbitration, including its existence. This now is QUESTIONABLE.
Reasons: 1)The issues raised in such arbitrations are often of public interest. 2)Popularity of international commercial arbitration
Confidentiality
“Every Award shall be binding on the parties. The parties undertake to carry out any Award without delay
New York Convention requires the currently135 Contracting States to “recognize arbitral awards as binding and enforce them in accordance with the rules of procedure of the territory where the award is relied upon…”
Arbitration leads to a final and binding determination of the rights and obligations of the parties
An arbitration that takes place in State A is a foreign arbitration in State B. It does not matter if parties are from the same country, from different countries or that one or all are from State A.
Since even a domestic arbitration in State A is a foreign arbitration in State B, the courts of State B would be called upon to apply the New York Convention to enforcement
In some legal systems the courts will not come to the aid of a “foreign” award.
Foreign arbitration
The modern view is that arbitration is governed by the law of the place in which it takes place. Thus, it is a domestic arbitration in that State.
Many States draw a distinction between domestic and those that are considered to be international Arbitration.
1) The types of disputes 2)Some States enter only into valid arbitration agreements only if the arbitration is international
3)States have different laws governing domestic and international arbitrations
Difference between a domestic arbitration and an “international” arbitration
One method is considering the transaction; Does it involve a transaction that is either in a State other than the place of arbitration or that takes place in two or more States.
The other method is to consider the parties; do they come from different States.
The parties have expressly agreed that the subject-matter of the arbitration agreement relates to more than one country.
Definition of an international arbitration
Can be separated into reasons:
that are applicable to arbitration in general
and those that are applicable specifically
Why parties choose international commercial arbitration
Arbitration permits the parties to choose persons with specialized knowledge to judge their dispute.
Judges in State courts are less likely to acquire the same degree of expertise in the technical aspects of the transactions object of dispute .
Lawyers(counselor) who represent the parties and who may later serve as arbitrators in similar transactions.
In a constructed arbitration there may be engineers or architects as well as lawyers serving as arbitrator.
Arbitration in general
Arbitrators are chosen for a specific dispute. Tribunal remains with the arbitration from its commencement until its conclusion.
Procedure in arbitration is flexible and can be adapted to the needs of the particular dispute.
Arbitration is not subject to appeal on the merits. What the parties lose in legal security, because errors made by the tribunal in the application of the law cannot be corrected.
Faster decisions and lower costs as compared to litigation in the courts has been one of the traditional arguments in favor of arbitration.
Specific reasons
voluntary, nonbinding, conciliation process.
A 3rd party attempts to find common ground between the disputing parties.
Parties are free to determine how the mediation process should process
Parties may choose to specify in their contract that mediation should be conducted according to a predetermined set of rules International Chamber of Commerce
Mediation
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