Global Synergy : Strengthening International Commercial Arbitration Through Legal Frameworks and Cooperation
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February 18, 2024Publications
July 8, 2024Introduction
Over the years, the significant collaboration between nation-states and international organizations has been instrumental in facilitating arbitration for international commercial disputes. Together, they have introduced several measures and initiatives, underscoring the importance of arbitration as an efficient, neutral, and effective dispute resolution method.
These measures, such as robust legal frameworks, comprehensive institutional support, and extensive international cooperation, are not merely theoretical concepts. They are practical tools that have been proven to promote arbitration effectively, demonstrating their tangible impact in real-world scenarios.
Legal Framework
The legal framework for international commercial arbitration is designed to assist States in reforming and modernizing their laws on arbitral procedure so as to take into account the particular features and needs of international commercial arbitration. Three critical legal texts have significantly influenced and expanded the scope of international commercial arbitration.
1-United Nations Commission on International Trade Law (UNCITRAL) Model Law on International Commercial Arbitration (1985, amended in 2006): This is a legal framework for implementing and harmonizing regulations and statutes related to arbitration. It has a global
impact on effective arbitration practices. Many countries have adopted this model law, enhancing the legal infrastructure supporting arbitration.[1] While every State is responsible for creating its own arbitration law, many States have implemented the UNCITRAL Model Law, which forms the basis for legislation adopted in approximately 90 jurisdictions.[2]
2-The Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958), also known as the New York Convention, is a crucial instrument in international arbitration. It specifically addresses the recognition and enforcement of foreign arbitral awards and court referrals to arbitration. With 172 parties, its influence and reach are extensive, making it a cornerstone of international arbitration.
3-The UNCITRAL Arbitration Rules (1976, edited in 2013 ), provide a rule-based procedural framework, yet they are flexible enough to support party autonomy in arbitration. They allow parties to override the rules by agreement.[3]
On 9 July 2021, UNCITRAL reached another milestone in its 55-year history. The Commission adopted the 2021 Expedited Arbitration Rules (“EAR”).
In addition, many countries have passed laws to facilitate arbitration. These laws usually include international standards and practices. For example, there is the Arbitration Act 1996 in the United Kingdom and the Federal Arbitration Act in the United States.
Institutional support
Arbitral institutions have seen significant growth in recent years and play a crucial role in developing and improving standards in international commercial arbitration. These institutions have evolved from offering administrative and logistical support to actively shaping the arbitral process. Additionally, they have shown initiative in adjusting to the needs of their users.
They provide services such as appointing arbitrators, organizing hearings, and establishing rules that govern the arbitration process.
Furthermore, arbitration institutions and organizations conduct training programs and conferences to educate lawyers, judges, and business professionals about arbitration. This includes The Chartered Institute of Arbitrators ( CIArb), a professional organization representing the interests of practitioners in alternative dispute resolution. These initiatives help build expertise and awareness, promoting the use of International Commercial Arbitration.
International Cooperation
In recent years, there has been a significant increase in bilateral and multilateral trade agreements. Consequently, the number of arbitrations initiated under these agreements has also risen.
Further, Regional organizations such as the European Union (EU), the Association of Southeast Asian Nations (ASEAN), and the African Union (AU) have initiatives that promote arbitration among member states. These initiatives often involve harmonizing arbitration laws and practices within the region.
One other example of regional initiatives is China’s Belt and Road Initiative (BRI), which aims to expand regional markets and facilitate regional cooperation. In the context of a rising volume of cross-border transactions generated by the BRI, a robust legal framework on dispute resolution is required to forge investor confidence and enable BRI’s integral goal of economic integration. In light of the substantial levels of harmonization among arbitration laws, arbitration is argued to constitute a primary vehicle of international commercial dispute resolution in an economically integrated Asia under the BRI. Against this backdrop, the BRI provides a unique opportunity to contemplate the possibility of regional harmonization, as within the Asian economies along the BRI, of the public policy exception to arbitral enforcement.
Policy and Advocacy
Along with UNCITRA, other international organizations, including The International Bar Association (IBA) and the World Trade Organization (WTO), renowned for their expertise, champion arbitration as the optimal method for dispute resolution. They offer comprehensive guidelines, model clauses, and best practices, instilling confidence in the effectiveness of this approach.[1]
For example, in a significant move, the International Bar Association issued guidelines on conflicts of interest in international arbitration in May 2004. These guidelines were a crucial step towards bringing greater consistency to questions regarding the independence and impartiality of arbitrators in international disputes, thereby enhancing the credibility of the arbitration process.[2]
Technological Advancements
Amidst the rapid expansion of the digital economy, Online Dispute Resolution (ODR) systems are emerging as a crucial global trend. This is driven by the necessity to establish cost-effective and convenient mechanisms that leverage digital technologies to enhance and expedite consumer access to solutions, particularly for smaller or lower-value claims. This global impact underscores the importance of ODR in the digital economy, a fact that policymakers need to be acutely aware of.
ODR platforms excel in managing various aspects of arbitration, from claim submission to virtual hearings, thereby significantly reducing costs and time delays. This efficiency instils confidence in legal professionals, assuring them of a streamlined dispute resolution process.
UNCITRAL Model Law on Electronic Transferable Records [MLETR] creates an enabling legal framework for paperless trade, which can be used in international commercial arbitration. It provides an international framework to align national laws and enables the legal use of electronic transferrable records both domestically and across borders.
Conclusively, the combined efforts of nation-states and international organizations have significantly bolstered the use of arbitration in international commercial disputes. With robust legal frameworks, institutional support, international cooperation, and ongoing advocacy, arbitration has become a cornerstone of international dispute resolution, providing a viable alternative to traditional litigation.
References :
- Weixia Gu, China’s Belt and Road Development and A New International Commercial Arbitration Initiative in Asia, 51 Vanderbilt Law Review 1305 (2021)
- Ferrari,F, “International Commercial Arbitration ( A Comparative Introduction )”, New York, Edward Elgar Publishing, 2021
- Jančová; “Gilles Cuniberti, Rethinking International Commercial Arbitration Towards Default Arbitration – Book Review”
TDM 5 (2018), www.transnational-dispute-management.com - Alajaji, A. (2016). An evaluation of e-commerce legislation in GCC states: Lessons and principles from the international best practices (EU, UK, UNCITRAL). https://core.ac.uk/download/76962054.pdf
- UNCITRAL 2012 Digest of Case Law on the Model Law on International
Commercial Arbitration, 201 - https://www.scconline.com/blog/post/2021/10/30/exploring-the-use-of-uncitrals-arbitration-rules-and-materials-in-indian-ad-hoc-arbitrations/
- Worldwide – International Courts & Tribunals – Disclosing Third-Party Funding In International Arbitration: Where Are We Now?. https://www.mondaq.com/uk/international-courts–tribunals/1290740/disclosing-third-party-funding-in-international-arbitration-where-are-we-now
- IBA and World Bank Report Links Legal Aid to Economic Growth | ASIL. https://www.asil.org/ILIB/iba-and-world-bank-report-links-legal-aid-economic-growth
- Arbitral Tribunals | Adell & Merizalde. https://www.adellmerizalde.com/arbitral-tribunals
AUTHORS & CONTRIBUTORS
- anahita asgari
- June 26, 2024
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