Key elements of arbitration:
1. Arbitration agreement
2. Need for a dispute
3. Commencement of arbitration
4. Arbitral proceedings
5. Decision of the tribunal
6. Enforcement of the award
5. Decision of the tribunal:
-parties settle dispute among themselves ( do not wish to go for proceedings or not to prolong the
dispute, come for arbitration); Settlement agreement
Article 36(1) UNCITRAL, if parties settles the disputes shall be recorded by the arbitrator, and
shall pass an award of settlement.
-if not settled, parties go for arbitration proceeding
After the proceedings of arbitration passes an award, which usually is a written award
Such written award is binding on the parties, the parties are bound as they have entrusted
the arbitrator with such power
Arbitrators should have used their judicial mind i.e. legal reasoning, precedents etc.
-How to reach a decision
Sole ; no conflicting award/decision. Single decision
Non-sole tribunal; chances of conflict and dissent, such dissent shall only have persuasive
value, they are free to give dissenting award, as they have to be unbiased
6. Enforcement of the Award:
-the function of the arbitrators ends after having passed the award, the enforcement is up to the
parties, no tribunal exist after award passed except when court need clarification from tribunal or
in case of an appeal.
- Art 34(6)- ICC rules; 1. Award binding on parties, 2. Parties are bound to carry out award
without delay & 3. Waived their right to any form of recourse if waiver validly done
-winning party gets to choose when and how to enforce (usually). Commercial case; defaulting
party. At times winner is not clear, enforcement has to upon particular issues.
-If award not carried out voluntarily, usually carried out voluntarily.
If parties don’t come voluntarily, it shall be enforced by legal proceedings
- Which court of law?
Winning party decides
Enforcement : a. in court of the country in which the losing party resides or has their place of
business
b. in the court of the country in which the losing party has assets that may be
seized
Summary of what has been taught:
-arb is a hybrid process, there is a private agreement, the proceedings are private; but the award
is public (public importance). Hence can be called as a hybrid process. private+public
-the relationship between the national and international law is of vital importance
If conflict of law ( int and national) enforcement becomes difficult.
In case of conflict of laws the procedure becomes more complex,
- Int Comm Arb has become more complex, more institutionalized and more expensive these
days, no more cost friendly
- Positive side, the basic element remains the same. Basic elements same for domestic and int
arb. Some features like enforceability and submission agreement may be diff from domestic arb.
**submission agreement; after the dispute has arisen
WHY ARBITRATION?
- Neutrality; in domestic cases bias is there, parties know the arbitrators. ICA parties
wouldn’t know the arbitrators. More neutral
- Enforcement; various convention and rules are there to enforce. No international court for
private parties; whereas arbitral rules, international conventions to govern arb are there.
- Flexibility; party autonomy is there, rules can be tailor made for parties
- Confidentiality; chances dispute might involve competitive aspect, like trade secret.
Hybrid process, proceedings are private.
- Additional powers of arbitrator; more powers to the arbitrators, some times have power
which even court’s don’t have.
CHANGING TRENDS IN ARB:
- Multiparty arbitrations; there is distribution supply agreement, all the parties involved
are sued . several parties are made claimants. Joinder and consolidation of parties
Issue; Case law: multiple respondents, both wanted to choose different arbitrators
- Non Signatories; parties who have not signed the arb agreement are made parties to arb.
Ex; ind company against subsidiary company of Japanese comp in India, they sue the
parent company many times instead of the subsidiary company. Umbrella contracts
usually.
- Conflicting awards; precedence not followed strictly, have persuasive effect. Downside,
as here parties prefer to go before courts.
- Judicialisation; Courts power cannot be taken by party’s agreement. As in case of
Appeals. Courts call all the documents and witnesses again to be scrutinized before the
court which have already been called and examined by the tribunal.
- Costs: costs are high in ICA.
BALANCED APPROACH:
- Ultimate aim of the parties is to have fair, reasoned award
- Int arb Vs Litigation; Parties realize that there is set of rules governing international com
arb.
- No international court
- Enforcement: conflicting views, downside for loosing party
- Govt and a pvt party; govt party will try not enforce the award according to another
foreign law (other party’s law)
Int arb vs national court, better relief at int comm arb
ALETERNATE DISPUTE RESOLUTION
- Mechanism where prefer not to go for litigation, they tend to negotiate the dispute
- Parties prefer to negotiate before going for arb
- Try for settlement by negotiation in good faith
- Parties are clear with their interest, which shall be compromisable or non-compromisable
- International contracts usually have ADR clause
ADR – alternative to litigation
- Various modes of ADR
- Hybrid clause mediation/negotiation 1st, then arbitration. Arb not necessarily the 1 st
resort.
- Awards are enforced nationally and internationally.