Class Presentation Submission

Written Report
Name: Harish B
Register No: BC0190016
Date of Submission: 10-12-2022

Topic: Study on international arbitration and developing countries.

Thanks to the rapid outburst of trade relations and industrialization in Europe, America and
the developing countries such as the famous petrol-exporting countries like the middle east.
Also, the growth of state-controlled enterprises and their participation in commercial
transactions has outlined the need for newer, efficient methods to resolve the disputes
between the parties. The answer to this, was arbitration, a new, highly preferred method of
dispute resolution that has helped in the inexpensive and quick settlement of disputes.
The issue regarding international trade transactions were that they must not be disrupted at
any cost, since it usually involves a large of money and resources, stoppage or disruption
could lead to large losses to people who are concerned. Access to national and international
courts was not really a feasible option to developing countries. Moreover, the court system
ensured that one party had a ‘home court advantage’ that was highly unfavorable to the other
party, moreover a slew of legislations and regulations prevented developing countries from
accessing such remedial measures promised under courts.
Hence, the flexibility, accessibility and the consensual nature which prevents one party from
dragging another to court has attracted many countries for resolving their disputes.
The issues arises when we realize most of the developing countries such as India were
previously occupied by powerful industrial nations who exploited the resources and wealth of
such countries. For such countries to come forward and participate in world trade, they need
to rely on the resources and investments of other developed countries.
However, international arbitration has not really been a bed of roses for developing countries,
below, I have enumerated some of the issues that such countries face.
1. Choice of Forum: ‘The home court advantage’ is something that has always worked
in the favor of developed and rich nations, developing countries are eager not to
arbitrate in forums that are placed in Western Nations. Most countries from the
Middle East prefer internal arbitration, Iran has a strict policy which prohibits
arbitration from happening outside its own border for governmental contracts.

2. Choice of law: Most developing countries have always pushed for substantiative
internal laws to govern enforceability of arbitral awards which has unsurprisingly
been denied by developed countries. Countries from Asia and America have claimed
that international laws established for their sake haven’t really been favorable to them,
 these laws were established at a time when western chauvinism was at its height. This
was mere tokenism by such established countries.

3. Issues of arbitration: OPEC nations have suggested that exporting countries must
have a right to rescind arbitration agreements and substitute these with their own
national tribunals. Libya in the year 1973, refused to comply with an arbitration
agreement stating that its internal policies and laws prevented issues that involved
sovereignty and the same cannot be subject to arbitration.

Major established systems that provide facilities for arbitration:

1. The Rules of the International Centre for the Settlement of Investment Disputes
("ICSID" or "Centre")
2. The Rules of Conciliation and Arbitration of the International Chamber of Commerce
("ICC") (1975);
3. Commercial Arbitration Rules of the American Arbitration Association ("AAA")
(1977);
4. United Nations Commission on International Trade Law Arbitration Rules
("UNCITRAL") (1976) and
5. Rules of the Arbitration Institute of the Stockholm Chamber of Commerce ("SCC")
(1976).
Conclusion:
From the above discussion, I concluded that any arbitration agreement will be successful only
if the same is established while keeping in mind the needs and handicaps of developing
countries. Most developing countries view the very concept of arbitration as a mechanism
which is primarily established to carter the interests of the western countries, there is an
immediate need to raise the awareness of the advantages of arbitration and alternate dispute
resolution amongst developing countries. India has created provisions for international and
foreign arbitrations but that’s not the case with other countries such as countries from the
middle east and south American countries.
We need to realize the potential held by arbitration and ensure that countries are provided
with the freedom to avail these services.