ARBITRATION

Arbitration and International Trade Disputes

Arbitration and International Trade Disputes

Introduction

Over the past few decades, international commercial dispute resolution has witnessed substantial change and improvement. A notable feature has been a move away from the traditional court-based litigation model, allowing exploration of other methods and techniques. The United Nations Commission on International Trade Law ('UNCITRAL') has played an important role in this development of alternative dispute resolution. Since its establishment in 1966 UNCITRAL has made improving international commercial dispute resolution one of its priorities.1 Two important achievements arising from its efforts are the UNCITRAL Arbitration Rules (1976) ('Arbitration Rules') and the UNCITRAL Conciliation Rules (1980) ('Conciliation Rules').2 The products of active participation of international experts from various legal, economic and social backgrounds, both have made a significant contribution to the more efficient resolution of international commercial disputes. Both sets of Rules are based on agreement between the parties, operating on a private contractual rather than public statutory level. This is an important point which distinguishes the Rules from UNCITRAL's other major achievement in dispute resolution: the UNCITRAL Model Law on International Commercial Arbitration ('Model Law').3 The Rules are a form of contractual trade law dispute resolution. Since the expectations of the private parties to an arbitration or conciliation under the Rules risk being frustrated by the domestic laws of different countries, the Model Law provides countries with a template that they can adopt for their national laws in order to 'provide a hospitable legal climate for international commercial arbitration.' (Bennett c2002)

Conciliation Or Arbitration

The search for alternatives to traditional court-based litigation has resulted in a variety of forms of dispute resolution, which vary in their degrees of complexity, flexibility and formality. These include: arbitration, assisted negotiation, counselling, conciliation, evaluation, expert appraisal, mediation and mini-trials. Many of these are used to resolve national as well as international commercial disputes. While there are infinite possibilities for models of alternative dispute resolution, in one key respect there are really only two alternatives. In arbitration, the third person assisting in the resolution of the dispute is able to impose a binding decision on the parties; in conciliation, this person's role is limited to making a non-binding recommendation. The parties' choice of dispute resolution method will depend on their assessment of the advantages and disadvantages of different systems, an assessment which may be influenced by cultural considerations. It has been suggested that the distinction between arbitration and litigation is increasingly a formal one, since both involve a binding decision by a third party to resolve the dispute. In this sense, neither arbitration nor litigation is truly consensual(Binder 2005 ). However, the jurisdiction of an arbitral tribunal is based on the original consent of the parties to submit to arbitration, evidenced by an arbitration agreement or by an arbitration clause in a substantive agreement. Because arbitration is conducted by a private tribunal established by the parties, through their arbitration agreement or clause they can determine such things as: the procedure of the arbitration (so that it fits the dispute); its location (such as a neutral territory); the applicable law; the language in which the arbitration will be conducted; arrangements to protect confidentiality (arbitral proceedings are not public); and the method of appointment of the arbitrator (for example, the arbitrator can be chosen based on his or ...