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| '''Arbitration''' is a ] technique for the resolution of ]s outside the ]s, wherein the parties to a dispute refer it to one or more persons (the "]s" or "arbitral tribunal"), by whose decision (the "]") they agree to be bound. ], the term is also used to refer to ], a process in which the final award does not bind the parties. | |||
| Arbitration is today most commonly used for the resolution of ] disputes, particularly in the context of ]. It is also used in some countries to resolve other types of disputes, such as ] disputes, ] disputes or ] disputes, and for the resolution of certain disputes between ]s and between investors and states. | |||
| ==History== | |||
| It is not definitively known when formal non-judicial arbitration of disputes first commenced. Under ], the first legislation relating to arbitration to be passed into law was the Arbitration Act 1697, but the practice was already commonplace prior to the enacting of the legislation. However, the combination of the ] and the growth of ] brought a greater level of sophistication to a process that had previously been largely ''ad hoc'' in relation to disputes between merchants resolved under the auspices of the '']''. | |||
| ==Nature of Arbitration== | |||
| Arbitration is, essentially, another form of dispute resolution. Arbitration is not the same as: | |||
| * ], although in some jurisdictions, court proceedings are sometimes referred as arbitrations<ref>In the ], small claims in the ] are dealt with by a procedure called "small claims arbitration", although the proceedings are held in front of a district judge, paid for by the state. In ], the courts dealing with commercial disputes is referred to as the ], although it is not an arbitral tribunal in the true sense of the word.</ref> | |||
| * ] | |||
| * ] | |||
| ===Advantages of arbitration=== | |||
| Parties seek to arbitrate because of a number of potential advantages of the arbitral process over judicial proceedings: | |||
| # when the subject matter of the dispute is highly technical, person with the appropriate degree of technical skill can be chosen as arbitrators | |||
| # arbitration can be much faster that utilising the courts | |||
| # there can be costs savings | |||
| # arbitration proceedings are generally private | |||
| # the arbitral process enjoys a greater degree of flexibility than the courts | |||
| # because of the provisions of the ], arbitration awards are generally much easier to enforce abroad than judgments | |||
| # in most legal systems, there is a very limited appeals process, that reduces the scope for lengthy litigation | |||
| However, some of the disadvantages of arbitration can be that: | |||
| # the parties need to pay the arbitrators, which adds an additional layer of legal cost | |||
| # although usually thought to be speedier, when there are multiple arbitrators on the panel, juggling their schedules for hearing dates in long cases can lead to delays | |||
| # in some legal systems, arbitral awards have fewer enforcement remedies that judgments | |||
| ===Arbitrability=== | |||
| By their nature, the subject matter of some disputes are not capable or arbitration. Matters relating to ], ] and ] are generally not considered to be arbitrable. However, most other disputes that involve private rights between two parties can be resolved using arbitration. In some disputes, parts of claims may be arbitrable and other parts not. For example, in a dispute over ], a determination of whether a patent has been infringed could be determined by an arbitration tribunal, but the validity of a patent could not (as this is a matter of public registration, which the panel has no power to rectify). | |||
| ===Seat of the arbitration=== | |||
| Most legal systems recognise the concept of a "seat" of the arbitration, which is a geographical and legal jurisdiction to which the arbitration is tied. The seat will normally determine the procedural rules which the arbitration follows, and the courts which exercise jurisdiction over the seat will have a supervisory role over the conduct of the arbitration. | |||
| ==Arbitration Agreement== | |||
| :''See also: ]'' | |||
| Arbitration is a consensual process; parties will only ever arbitrate where they agree to do so.<ref>Although parties are sometimes unaware that they have agreed to arbitrate, for example, where they sign terms and conditions which provide for arbitration without reading them.</ref> Such agreements are generally divided into two types: | |||
| * agreements which provide that, if a dispute should arise, it will be resolved by arbitration. These will generally be normal ], but they contain an ] | |||
| * agreements which are signed after a dispute has arisen, agreeing that the dispute should be resolved by arbitration (sometimes called a "submission agreement") | |||
| The former is the far more prevalent type of arbitration agreement. Sometimes, legal significance attaches to the type of arbitration agreement. For example, in certain ] countries, it is possible to provide that each party should bear the own costs in a conventional arbitration clause, but not in a submission agreement. | |||
| In keeping with the informality of the arbitration process, the law is generally keen to uphold the validity of arbitration clauses even when they lack the normal formal language associated with legal contracts. Clauses which have been upheld include: | |||
| * "arbitration in London - English law to apply"<ref>''Swiss Bank Corporation v Novrissiysk Shipping'' 1 Lloyd's Rep 202</ref> | |||
| * "suitable arbitration clause"<ref>''Hobbs Padgett & Co v J C Kirkland'' (1969) 113 SJ 832</ref> | |||
| * "arbitration, if any, by ICC Rules in London"<ref>''Mangistaumunaigaz Oil Production v United Kingdom World Trade'' 1 Lloyd's Rep 617</ref> | |||
| Agreements to refer disputes to arbitration generally have a special status in the eyes of the law. For example, in disputes on a contract, a common defence is to ] the contract is ] and thus any claim based upon it fails. It follows that if a party successfully claims that a contract is void, then each clause contained within the contract, including the arbitration clause, would be void. However, in most ] countries, the courts have accepted that: | |||
| # a contract can only be declared void by a court or other tribunal; and | |||
| # if the contract (valid or otherwise) contains an arbitration clause, then the proper forum to determine whether the contract is void or not, is the arbitration tribunal.<ref>For example, under English law see ''Heyman v Darwins Ltd.'' AC 356</ref> | |||
| Some argue that this position is potentially unfair; if a person is made to sign a contract under ], and the contract contains an arbitration clause highly favourable to the other party, the dispute is still referred to that arbitration tribunal. Nonetheless, the general rule does allow for commercial expediency; any other solution (where one first had to go to court to decide whether one had to go to arbitration) would be self defeating. | |||
| ==Arbitral tribunal== | |||
| {{main|Arbitral tribunal}} | |||
| The term, arbitral tribunal is use to denote the arbitrator or arbitrators sitting to determine the dispute. The composition of the arbitral tribunal can vary enormously, with either a sole arbitrator sitting, two or more arbitrators, with or without a chairman or umpire, and various other combinations. | |||
| In most jurisdictions, an arbitrator enjoys immunity from liability for anything done or ommitted whilst acting as arbitrator unless the arbitrator acts in ]. | |||
| Arbitral tribunals are usually divided into two types: | |||
| * ''ad hoc'' arbitation tribunals, which simply appoints arbitrators approved by the parties; or | |||
| * institutional arbitration tribunals, which are professional bodies providing arbitration services, such as the ] in ] or the ] in ]. | |||
| Permanent tribunals tend to have their own rules and procedures, and tend to be much more formal. They also tend to be more expensive, and, for procedural reasons, slower.<ref>For example, all arbitral awards issued by the ICC have to be reviewed internally before being handed down, which helps certainty and improves the quality of awards, but leads to delay and expense.</ref> | |||
| ===Duties of the tribunal=== | |||
| The duties of a tribunal will be determined by a combination of the provisions of the arbitration agreement and by the procedural laws which apply in the seat of the arbitration. The extent to which the laws of the seat of the arbitration permit "party autonomy" (the ability of the parties to set out their own procedures and regulations) determines the interplay between the two. | |||
| However, in almost all countries the tribunal owes several non-derogable duties. These will normally be: | |||
| * to act fairly and impartially between the parties, and to allow each party a reasonable opportunity to put their case and to deal with the case of their opponent (sometimes shortened to: complying with the rules of "]"); and | |||
| * to adopt procedures suitable to the circumstances of the particular case, so as to provide a fair means for resolution of the dispute.<ref>For example, in ] these are codified in section 33 of the Arbitration Act 1996</ref> | |||
| ===Procedure of the tribunal=== | |||
| Matters of procedure are normally determined either by the law of the seat of the arbitration, or by the tribunal itself under its own inherent jurisdiction (depending on national law). Procedural matters normally include: | |||
| * mode of submitting (and challenging) evidence | |||
| * time and place of proceedings | |||
| * language and translations | |||
| * ] of documents and other evidence | |||
| * use of ] and/or ] | |||
| * use of ] | |||
| * the appointment of experts and assessors | |||
| ==Arbitral Awards== | |||
| {{Main|Arbitration award}} | |||
| Although arbitration awards are characteristically an award of ] against a party, in many jurisdictions tribunals have a range of remedies that can form a part of the award. These may include: | |||
| # payment of a sum of money (conventional damages) | |||
| # the making of a "]" as to any matter to be determined in the proceedings | |||
| # in most jurisdictions, the tribunal has the same power as a court to: | |||
| ## order a party to do or refrain from doing something ("]") | |||
| ## to order ] of a ] | |||
| ## to order the ], setting aside or cancellation of a ] or other document. | |||
| ===Enforcement of Arbitration Awards=== | |||
| One of the reasons that arbitration is so popular in international trade as a means of dispute resolution, is that it is often easier to enforce an arbitration award in a foreign country than it is to enforce a judgment of the court. | |||
| Under the ], an award issued a contracting state can generally be freely enforced in any other contracting state, only subject to certain, limited defences. | |||
| Virtually every significant commercial country in the world is a party to the Convention, but relatively few countries have a comprehensive network for cross-border enforcement of judgments of the court. | |||
| The other characteristic of cross-border enforcement of arbitration awards that makes them appealing to commercial parties is that they are not limited to awards of damages. Whereas in most countries only monetary judgments are enforceable in the cross-border context, no such restrictions are imposed on arbitration awards and so it is theoretically possible (although unusual in practice) to obtain an injunction or an order for specific performance in an arbitration proceeding which could then be enforced in another New York Convention contracting state. | |||
| ===Costs=== | |||
| In some jurisdictions where it is normal practice to award ] against a losing party (typically, ] countries except for the ]), arbitral tribunals may also have power to award costs in relation to a dispute. In most countries where the tribunal may award costs, they may also determine that the losing party has to pay the arbitrators' fees. | |||
| ===Appeals=== | |||
| Generally speaking, by their nature, arbitration procendings tend not to be subject to appeal, in the ordinary sense of the word. | |||
| However, in most countries, the court maintains a supervisory role to set aside awards in extreme cases, such as ] or in the case of some serious legal irregularity on the part of the tribunal. | |||
| ==See also== | |||
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| ===External Links=== | |||
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| ==Footnotes== | |||
| <references/> | |||
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Revision as of 23:00, 17 October 2006
dont go to arbirtration.