Important Developments in Arbitration Globally You Must Know
Important Developments in Arbitration Globally You Must Know

 

The resort to the courtroom as a way of settling disputes is no longer fashionable. This does not in any way mean that disputes between persons both in private and commercial have declined. In fact with the rising trend in the commercial life of private persons and companies, commercial disputes are increasing in geometric progression.

As a relief to the fading prominence of courtroom or litigation as a disputed method, various alternative ways of settling disputes emerged. These emerging alternative ways of settling disputes have gained considerable prominence as they have gained acceptance even in the formal sector.

Some of the prominent forms of alternative dispute resolution methods include:

  1. Conciliation,
  2. Mediation,
  3. Arbitration,
  4. Facilitation,
  5. Neutral intervention, and
  6. Settlement conference.

There are circumstances which may require the use of two or more forms of alternative dispute resolution methods in order to achieve the desired goal.

Going by the topic of this study, it is appropriate that adequate attention be given to arbitration as one of the alternative forms of settling disputes. The degree of attention which shall be given to is to ascertain the level of advancement of arbitration on an international level.

What is Arbitration?

Arbitration as earlier said is one of the forms of settling disputes between two or more persons without necessarily going to court. The person(s) who gives a decision after an arbitration session is an arbitrator(s) and the decision of the arbitrators is known as an award.

The decision given by arbitrator(s) is recognized by courts and every person including other governmental authorities.

This study is not intended to center solely on rendering a definition of arbitration but to advance to establishing the extent the concept of arbitration has gone the world.

The development of arbitration in the following countries and regional organizations will be examined in this study: United States, United Kingdom, India, Netherlands, France, Canada, Mexico, Argentina, Ecuador, Uruguay, Venezuela, Australia, Astana and Kazakhstan, European Union, and International Chamber of Commerce.

The Advancement of Arbitration in the United Kingdom-

It is the usual practice of the courts in the United Kingdom to refuse an application for an injunction which will inevitably stall or bring an end to ongoing court proceedings in a fellow European Union member-state.

The Courts in the United Kingdom had in Nori Holding Ltd v. Bank Otkritie Financial Corporation (2018) EWHC 1343 (Comm) granted an injunction restraining the continuance of a court proceeding which was commenced without adhering to the arbitration clause in the business agreement which led to the suit.

With the decision of the English court in Nori’s case above the decision given by the Court of Justice of the European Union in the case of Allianz SPA v. West Tankers Inc (Case C-185/07) was upheld, therefore in the eyes of the English Court a good law.

It has also been argued that if Great Britain succeeds in pulling out of the European Union (Bri-Exit movement) that the above decision of the court which obviously was reached to uphold the tenets of the European Union will be departed from by the English Courts.

The English court again in an unreported decision had dismissed a suit seeking to set aside an award by a claimant because the claimant has failed to exhaust all the available remedies available under the arbitration laws in the United Kingdom.

The Advancement of Arbitration in the United States-

The law permits the participation of a foreign legal practitioner who is not licensed to practice in the United States to participate in the Arbitration proceedings in California.

This leverage extends to legal practitioners who are licensed to practice in other states in the United States but not California. This concession has taken effect since the 1st day of January 2019.

On the other hand, the Federal Arbitration Act of the United States provides to the effect that the decision of the arbitrator(s) can be challenged by a notice of not later than three (3) months. The notice which is given must be issued and served on the other party at the instance of the aggrieved party seeking to set aside the decision of the arbitrators.

The requirement of giving notice not later than three months by the party praying the court to set aside the decision of the arbitrators applies both to the municipal and international arbitration decision.

It does not matter that the arbitrators heard and decided the case within the United States or that the awards were reached outside the shores of the United States but to be enforced in the United States.

The Advancement of Arbitration in India  

The status of arbitration as a dispute resolution method in India is no longer in doubt. The parliament has proceeded to conceive and rendered a considerable amendment in the arbitration law of India by the introduction of the Arbitration and Conciliation Act (Amendment) Bill 2018 of India.

The amendment is presently at the desk of the parliament for approval. The areas highlighted below are the innovations which the amendment seeks to introduce by the amendment to the Arbitration and Conciliation Act of India, 2018:

  1. An Arbitration Council will be created in India which shall operate independently with the responsibility of accessing and admitting institutions engaging in arbitration and regulate the appointment of arbitrators.
  2. By the amendment which shall take effect arbitration proceedings are automatically seen as confidential in India.
  3. The amendment intends to grant immunity in favour of arbitrators where it is obvious that their actions or omissions during arbitration were done in good faith.
  4. The amendment proffered in the 2018 Bill will relate back to cases which were commenced under the 2015 amended Arbitration and Conciliation Act.
  5. Though paragraph (e) is not in allowed because the Supreme Court of India had in the case of BCCI v Kochi Cricket Pvt Ltd held that amendments will only apply to cases which were commenced after the amendment came into force.

The Advancement of Arbitration in Canada

With the United Nations Commission on International Trade Law on Arbitration, the British Columbia of Canada adopted and amended their international arbitration law in the month of May 2018 after Ontario had amended their commercial arbitration law in the month of March 2017.

The Advancement of Arbitration in the Netherlands

The instructive case of Maximov v. Novolipetsk (NLMK) illustrates the attitude of the Netherlands on international arbitration.

In the above-mentioned case which was administered under the ICAC in Moscow, the claimant Mr. Maximov had asked for the unpaid sum from the NLMK for the shares in Maxi Group.

The claimant had succeeded in his claim at the stage of arbitration but the decision of the arbitrators was rejected by the Arbitrazh Court of Moscow and the court of Appeal Russia. The decision of the arbitration panel under review was given by the ICAC (Moscow) in a dispute between Mr. Maximov and Novolipetsk Metallurgical Plant (NLMK).

Mr. Maximov claimed for the payment of the outstanding purchase price for the shares in Maxi Group that he sold to NLMK. The claim of Mr. Maximov succeeded in part in the decision given on the 31st day of  March 2011.

The Award was disregarded by the Moscow Arbitrazh Court and the annulment was upheld by Russia’s courts that heard a further appeal on the matter.

In an attempt by Mr. Maximov to enforce the awards which failed in Russia, the District and the Court of Appeal of Amsterdam refused to enforce the award but stated that the setting aside of a decision reached by arbitrators does not stop the courts and government of Netherlands from recognizing and enforcing an annulled arbitration decision.

Though the courts in Russia annulled the claim of Mr. Maximov he sought to enforce the Award in the Netherlands. Both the Amsterdam District Court and the Amsterdam Court of Appeal denied Mr. Maximov’s request, but both courts also found that annulment of an award would not necessarily mean that it cannot be recognized and enforced in the Netherlands.

The Advancement of Arbitration in Argentina, Ecuador, and Mexico

The wakeup call for the reforms in the existing or creation of arbitration laws extends to Argentina. In reaction to the wakeup call, the Argentine Chambers of Deputies relying on the model of United Nations Commission for International Trade Law on arbitration enacted their new Arbitration Act on the 4th day of July 2018 but gazetted on the 26th day of July 2018.

The approach of Argentina is clearly in contrast with the stance of Ecuador In 2017. As contained in the alleged draft of the Bilateral Investment Treaties which at the moment has not been publicized of Ecuador investors are obligated to exhaust all municipal remedies before resorting to arbitration.

Mexico had in July 2018 toed the line of Argentina by reviewing and adopting the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention) a law within Mexico. The international treaty which was ratified by Mexico will form the basis for resolving disputes under arbitration in Mexico.

The Advancement of Arbitration in Uruguay and Venezuela

Similar to the commendable bold step taken by Argentina, British Columbia (Canada) and Mexico, in May 2018, the legislative arm of the Uruguay central government known as the Chambers of Senators of the Uruguayan Congress consented to  the draft of the International Commercial Arbitration law which is modeled from the United Nations Commission for International Trade Law (UNCITRAL) on Arbitration.

This is the first record of any enactment which is intended to govern international arbitration in Uruguay

Venezuela, on the other hand, does not have a given law on arbitration. The lack of laws governing the resolution of disputes by arbitration in Venezuela must have accounted for the flood of awards against Venezuelan companies and companies operating under the government of the country.

While they are adamant to initiate laws which will govern the practice of arbitration in the country surely, this is not a shield from the various international awards which are given against the country.

The Advancement of Arbitration in France

In reaction to the continuous changing circumstance in relation to the practice of arbitration in the global scene, France enacted “Sapin 2 law” dated the 9th day of December 2016. The Sapin 2 law was made part of the French Civil Enforcement Proceedings Code in Articles L-111.1-1, L.111.1-2, and L.111.1-3 with emphasis on sovereign immunity from enforcement.

This law simply mandates creditors who are a foreigner to seek and obtain the consent of a French court before the awards of arbitration can be enforced in France. From the above, it means that with the provisions of the Sapin 2 law unless the state has permitted enforcement of an arbitral award cannot be levied on any form of assets of foreign states.

Conclusion

The advantages of alternative ways of resolving disputes are quite uncountable. Though various countries are yet to create a unified set of laws which will adequately govern the practice of arbitration in the respective countries.

The efforts put in place by countries such as India is commendable while the South American Countries particularly, Venezuela and Ecuador are encouraged to embrace the global trend in Arbitration.

The continued resistance to the adoption of the standard practice in the practice of arbitration by various countries will only limit the access of the country through their citizens and corporate agencies participating in international trade from appreciating the concept of alternative dispute resolution particularly arbitration.

Finally, the power blocks i.e the United Kingdom, United States and Russia seems to be bringing in their power tussle and the competition of dominance into the international practice of arbitration. This act ought to be discouraged as it will strip arbitration of the lovely features of independence and neutrality which it enjoys.

 

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