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LIST OF ABBREVIATIONS
ADR Alternative Dispute Resolution AJD Admiralty Jurisdiction Decree FHC Federal High Court ICC International Chamber of Commerce ICJ International Court of Justice ICSID International Centre for Settlement of Investment Disputes ILM International Legal Materials LFN Laws of the Federation of Nigeria NWLR Nigerian Weekly Law Reports SI Statutory Instrument UNCITRAL United Nations Commission on International Trade Law WTO World Trade Organisation
EMERGING AND CURRENT TRENDS IN INTERNATIONAL DISPUTE SETTLEMENT Parties to international business transactions are free to select and build the terms of their contract as long as they keep within specified boundaries of legality and mandatory rules. The flexibility created thus extends to the settlement of disputes and ensures that parties can resort to a host of methods to resolve their differences, exclusively or at the same time concurrently. These methods include:
a) Litigation b) b) Arbitration c) c) Mediation/ADR 15
This is a civil matter brought before courts of law. At the international level, disputing states may bring matters before the International Court of Justice of the United Nations where both states have consented to the court¶s jurisdiction. In the national courts however, a party may bring an action whether or not the other consents so long as the court has the necessary personal and subject matter jurisdiction over the dispute. However, the right to resort to a court may in some instances be premised on resort to other forms of dispute settlement that have been compulsorily stipulated by the contract. These pre- litigation forms of dispute resolution can include negotiation and mediation.
The parties may agree at the time of the contract, or at any stage before or after the dispute has arisen, to arbitrate their disputes. The parties may draft their own rules for an ad- hoc arbitration, but this may prove troublesome especially after the dispute has arisen. And, generally such rules are not deemed a priority at the time of the making of the contract when parties generally consider disputes as a remote possibility. As an alternative, the parties may choose from a plethora of predetermined rules offered by the various arbitration institutions around the world.
This form of dispute settlement is not in any way new to international business transactions. Mediation is as old as the legal system itself and has always existed in all peoples and races through time. The role it currently plays is somewhat muted although this may yet gain more prominence. The reason for this conclusion is based on its success rate compared to arbitration and litigation and the fact that it is cheaper, faster and more private than either litigation or arbitration.
Established method today for resolving disputes between parties to international commercial agreements. 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. One of the distinguishing characteristics of international arbitration is that it is not tied to a particular legal procedure or practice, unless the parties desire it to be so.
International Commercial Arbitration
´ means an arbitration relating to disputes arising out of legal relationships, whether contractual or not, considered as commercial under the law in force in India and where at least one of the parties is² An individual who is a national of, or habitually resident in, any country other than India; or A body corporate which is incorporated in any country other than India; or a company or an association or a body of individuals whose central management and control is exercised in any country other than India; or the Government of a foreign country;
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). The Indian
Arbitration and Conciliation Act, 1996 the governing arbitration statute in India. It is based on the Model Law on International Commercial Arbitration adopted by the United Nations Commission on International Trade Law (UNCITRAL) in 1985.
INTERNATIONAL CONVENTIONS ON ARBITRATION India is a party to the following conventions the Geneva Protocol on Arbitration Clauses of 1923 the Geneva Convention on the Execution of Foreign Arbitral Awards, 1927; and the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards. It became a party to the 1958 Convention on 10th June, 1958 and ratified it on 13th July, 1961.
REQUIREMENTS OF THE ARBITRATION ACT:
Section 7(3) of the Act requires that the arbitration agreement must be in writing. Section 7(2) provides that it may be in the form of an arbitration clause in a contract or it may be in the form of a separate agreement. Under Section 7(4), an arbitration agreement is in writing, if it is contained in : (a) a document signed by the parties, (b) an exchange of letters, telex, telegrams or other means of telecommunication, providing a record of agreement, (c) or an exchange of claims and defense in which the existence of the agreement is alleged by one party and not denied by the other. In section 7(5), it is provided that a document containing an arbitration clause may be adopted by "reference", by a contract in writing.
INTERNATIONAL COMMERCIAL ARBITRATION
The UNCITRAL Model Law on International Commercial Arbitration was adopted by the United Nations Commission on International Trade Law on 21 June 1985. In the General Assembly of 11 December 1985 it is recommended that all States give due consideration to the Model Law on International Commercial Arbitration. It covers all processes of arbitral process from the arbitration agreement to the recognition and enforcement of the arbitral award and reflects a worldwide consensus on the principles and important issues of international arbitration practice This law came into existence because of two reasons: Inadequacy of domestic laws Disparity between national laws
You generally choose arbitration:
1. for its confidentiality (no public hearings, no publication of the awards unless accepted by the parties, no formal registration of the award by public or tax authorities, no media. You can even agree upon total silence for all parties, competitors cannot get information). It is often preferred for (potential) disputes about M&A, joint ventures, patent cases, IP, when important tax consequences could be involved, etc..
2. in order not to disrupt the shaken business relationship (arbitration is more friendly and less aggressive), can be more gentlemanlike. You can even be judged by peers. Often you will have to be able to go on with the same business partner after the arbitration; etc. 3.o for speed (no appeal(s), no backlog of the court, etc.) and to save money (in some cases) o the parties at least have some influence on the choice of the arbitrators and can choose very competent, specialized and trusted arbitrators. Their decisions will therefore be easier accepted.
4. it is possible to introduce technical expertise in the arbitration panel itself, which is an advantage for technical disputes (f.i.: construction cases, industrial insurance cases, transfer of know-how, commodity trade, etc.). This avoids the need for the judge or the arbitrator to appoint an expert to give a technical opinion, and thus avoids loss of time. You don¶t want the decision to be taken by someone who knows almost nothing about your business or the technical matters at hand. With arbitration you can combine technical experts and lawyers into one panel. 5. o to combine skills and knowledge about different legal systems into on panel.
6. ³Final, binding decisions While several mechanisms can help parties reach an amicable settlement - for example through mediation under the ICC ADR Rules - all of them depend, ultimately, on the goodwill and cooperation of the parties. A final and enforceable decision can generally be obtained only by recourse to the courts or by arbitration. Because arbitral awards are not subject to appeal, they are much more likely to be final than the judgments of courts of first instance. 7. International recognition of arbitral awards Arbitral awards enjoy much greater international recognition than judgments of national courts. Over 134 countries have signed the 1958 United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, known as the "New York Convention". The Convention facilitates enforcement of awards in all contracting states.
8. Neutrality :In arbitral proceedings, parties can place themselves on an equal footing in five key respects: 1. Place of arbitration 2. Language used 3. Procedures or rules of law applied 4. Nationality 5. Legal representation Arbitration may take place in any country, in any language and with arbitrators of any nationality. With this flexibility, it is generally possible to structure a neutral procedure offering no undue advantage to any party.
DISADVANTAGES of arbitration
Arbitration can sometimes get very expensive indeed: the parties have to pay or at least advance the arbitrators fees and the administrative costs. The award will decide upon the question which party or parties will finally have to support the fees and costs. But there will be no appeal (s) and that can save a lot of money. Independence and impartiality of the arbitrators have to be carefully monitored. Therefore you should avoid some mollified and purely commercial arbitration institutes, sometimes even organized by disbarred lawyers. Don¶t accept arbitration clauses referring to unknown arbitration institutes and always be informed (trough LNA members). Ad hoc arbitration can even be more dangerous. Sudden death´: no appeal is possible. As a client and as a lawyer you cannot make any mistakes, omit anything of importance, etc.. Quite stressing.
ENFORCEMENT OF FOREIGN AWARDS
In Arbitral proceedings with more than one arbitrator, any decision of the arbitral tribunal can be made, unless otherwise agreed by the parties, by a majority of its members. If during arbitral proceedings, the parties settle the dispute, the arbitral tribunal shall terminate the proceedings if requested by the parties and the settlement can be made in the form of an arbitral award on agreed terms. The award shall be made in writing and shall be signed by the arbitrator. The arbitral proceeding with more than one arbitrator the signature of all arbitrators are mentioned. The award shall state the reasons upon which it is based. The award shall state its date and place of arbitration. After the award is made the copy of each signed proceedings shall be distributed to each party. With in thirty days of receipt of award a party with notice to other party may request the arbitral tribunal to correct any error relating to computation, clerical or any other error of similar nature.
Article 14, ³Enforceability of settlement agreement´, of the Conciliation Model Law: ³If the parties conclude an agreement settling a dispute, that settlement agreement is binding and enforceable . . . [the enacting State may insert a description of the method of enforcing settlement agreements or refer to provisions governing such enforcement].´
Foreign Awards The decision of the Arbitration follows in the form of an award.Section 44 (New York Convention Awards) of the Arbitration and Conciliation Act, 1996 defines ³foreign award´ means an arbitral award on differences between persons arising out of legal relationships, whether contractual or not, considered as commercial under the law in force in India, made on or after the 11th day of October, 1960 ± a) in pursuance of an agreement in writing for arbitration to which the convention set forth in the First Schedule applies and, b) in one of such territories as the Central Government, being satisfied that reciprocal provisions have been made may, by notification in the official Gazette, declare to be territories to which the said convention applies.
Section 53 (Geneva Convention Awards) of Arbitration and Conciliation Act, 1996, defines µforeign awards¶ means an arbitral award on differences relating to matters considered as commercial under the law in force in India made after the 28th day of July, 1924 ± a) in pursuance of an agreement for arbitration to which the protocol set forth in the second schedule applies, and b) between persons of whom one is subject to the jurisdiction of some one of such powers as the Central Government,. Being more of the six exceptions laid down in Section 13 of the CPC 1908. [Vishwanath V/s Abdual Wajid, Air 1963 SC I]
RECOURSE AGAINST AWARDS: The said agreement is not valid under the law to which the parties are agreed. The parties making the application were not given proper notice. The decisions made under proceeding beyond the scope of arbitration. The proceeding was not in accordance with the agreement
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