Commercial Dispute Resolution Week 5 | Quizlet

What is arbitration and some of its characteristics?

Privately arranged litigation

- It can be institutional (ICC, PCA, ICDR etc.) or ad hoc

- It can be agreed beforehand (pre-dispute) or after a dispute arises

- If you agree to arbitration, you are waiving your right to access to court (Art. 8 UNCITRAL Model Law)→ this does not mean that you are waiving your right to a fair trial

- A court MAY refuse to enforce an award if they believe that if violated the right to a fair procedure

Is arbitration common?

YES

How can one say that arbitration is similar to litigation?

Parties pleading their case and presenting evidence in a structured legal procedure, leading to an enforceable verdict (award) by a third party (arbitral tribunal).

Arbitration agreement definition

Art. 7 UNCITRAL Model Law

Arbitration agreement" is an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not.

Arbitration agreement characteristics

- The arbitration agreement is central to arbitration

- It is either in a dispute resolution clause or a separate agreement

- It may include an institutional clause

Arbitration agreement elements

Article 19: Parties are free to choose the procedure. If they can not agree, the arbitral tribunal will based on the model law

Article 20: Parties are free to choose the place of arbitration. If they can not agree, the arbitral tribunal will*

Article 21: Parties are free to choose the commencement. If they can not agree, it will start when the request has been received by the respondent

Article 22: Parties are free to choose the language. If they can not agree, the arbitral tribunal will

Article 23: Statements of claim and defence required

* In an international dispute usually it will be in a neutral state → this decides the lex arbitri.

Decisions on the effectiveness of an arbitration agreement (articles)

Article 8

A court before which an action is brought in a matter which is the subject of an arbitration agreement shall [...] refer the parties to arbitration unless it finds that the agreement is null and void, inoperative or incapable of being performed

Article 16

The arbitral tribunal may rule on its own jurisdiction, including any objections with respect to the existence or validity of the arbitration agreement.

Two more important things are in article 16

Severability/separability clause AND that A decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause.

two forms of validity when it comes to the arbitration agreement

Formal validity

Substantive validity

Formal validity

- It covers formal issues such as whether the agreement has to be in writing or not

- Law of the forum*

e.g. If arbitration takes place in Sweden, and Swedish law requires a written agreement, then it must be written

Substantive validity

- It covers substantive issues such as whether the agreement covers that specific circumstance

- Law of the forum may apply OR

- The substantive law of the contract may apply

Key point: If the contract states that "German law applies to this contract," you must explicitly ensure that this also applies to the arbitration agreement; otherwise, arbitrators may apply the forum law instead.

This ability of choice can be seen in:

UNCITRAL Model Law, Art. 34(2)(a)(i)

can you apply the law of the forum if you meet somewhere else?

YESSS

Applicable laws and rules on arbitration

Substantive law

Lex arbitri (law of the forum)

Arbitration rules

Substantive law

- Covers the substantive aspects of the contract (quality of goods, delivery, damages etc.)

- Usually chosen within the contract by the parties

Lex arbitri (law of the forum)

- It is mostly the procedural law (number of arbitrators, time limits)

- Also determines the relationship between courts and arbitral tribunals (how are awards enforced, setting aside of awards etc.)

Arbitration rules

- Procedural rules as chosen by the parties, operating alongside lex arbitri but must comply with mandatory lex arbitri

Two types:

Mandatory lex arbitri rules → chosen rules cannot override

Non-mandatory lex arbitri rules → chosen rules can override

Who pays for the arbitration?

The parties- really expensive. But it depends whether more expensive than national litigation

The UNCITRAL model law on International Commercial Arbitration, what can you tell about it?

- Not a binding law. Just a model

- A combination of 'arbitration rules' and 'arbitration law' (lex arbitri / law of the forum)

i.e. what parties can freely determine and what is mandatory in a given country.

- One can say that it is comparable to the national codes of civil procedure

- Countries can adopt to a certain extent or fully this model law

Institutional arbitration rules

- Many sets of (institutional) arbitration rules exist (e.g. ICC rules)

- These do not have the 'mandatory law' elements

in other words?

In other words, the ICC may have rules on how arbitrators should be appointed, but if Sweden has mandatory rules on this, the swedish rules will apply

Relationship between arbitration and (state) courts

Why would you need courts?

- Enforcement of an arbitration agreement

- Annulment of an arbitration agreement OR award

- Interim measures / conservatory measures (Art. 9 & 17(2) Model Law)

- Assistance in taking evidence (Art. 27 Model Law)

So if I am trying to annul an award, I am basically appealing.

NOOO

→ If you go to court for any of those, it does not equal appeal.

Court assessment will never be on the merits. Even if the arbitrator was clearly wrong.

Arbitrators characteristics

- Arbitrators usually are lawyers, experts or professors

- Appointing an arbitrator =/= the arbitrator being on your side

- All arbitrators must be and appear to be impartial, independent and neutral. (art. 12, 13, 18 Model Law)

- The risk if they do not fulfil the aforementioned? A vacated award.

- They have an obligation to render an enforceable award, meaning an award that can not be annulled by a court

Strategies & methods in choosing arbitrators:

a) If there are three arbitrators, each party typically selects one arbitrator, and they together choose the chair

b) Parties exchange lists of names, and if there's a common choice, that person is selected.

c) If the parties can't agree on an arbitrator, the arbitration institution may appoint one or more arbitrators to ensure the tribunal is established quickly.

Arbitral proceedings

Once you have the arbitral procedure and everything, you go to choose the proceeding rules.

- If parties can't agree, the tribunal will decide

Examples of proceeding topics

Dates, deadlines, terms

Discovery/evidence

Witnesses/testimony

Expert reports

Tutorials

Confidentiality / 'protective order'

Governing law

Hearing procedure

Form of award

Communications

Procedural decisions

Remedies against arbitral awards

What if you don't agree with the award?

Appeal

Annulment / setting aside / vacating

Oppose efforts to enforce award

Appeal

- Usually no, but parties may introduce an appeal system

- Closest thing to appeal is the correction of an award as per article 33 Model Law

Annulment / setting aside / vacating

- Rarely successful

- You can not ask annulment based on merits

- Where? Court at the place of arbitration

- Based on which law? Lex arbitri (lex fori)

- Grounds? e.g. arbitrators went beyond the scope of the agreement, no notice, the award does not contain all requirements (signatures etc.)

Oppose efforts to enforce award

- Where? At the Court at the place of enforcement (Usually it is a state where the party has assets)

- Based on which law? Law of the court at the place of enforcement.

- Grounds? Usually the same with the reasons for annulment (examples found in Art. 36 Model Law)

Case for opposing efforts to enforce award, similar

Krombach vs. Bamberski