Selecting an Arbitration Forum in Asia - Research Proposal Example

Running Head: Selecting an Arbitration Forum In Asia Selecting an Arbitration Forum in Asia Research Proposal From: Date: Subject: Research Proposal Proposed Research Topic: Selecting an Arbitration Forum in Asia Introduction Selecting an arbitration forum anywhere in the world is important because the quality of the process will largely depend on the quality of the forum.1 In Asia the quality of an arbitration forum is particularly important. Asia is comprised of several jurisdictions and while it is in the process of converging, it remains characterized as a multi-layered legal system with divergent laws and systems.2 Arbitration by its very nature is an alternative to litigation and theoretically attempts to provide an efficient means of foregoing the complexities attached to legal systems, their processes and laws.3 Economic expansion in Asia, particularly Southeast Asia is such that more and more international trade and investments are being directed to the region.4 As a rule, increases in commercial trade increases the number of disputes.5 The divergent legal systems involved in international commercial disputes make arbitration of disputes more appealing than formal litigation. This is particularly relevant to Asia, an area that has expanded economically both regionally and internationally. The increase in cross-border trade corresponds with an increase in commercial disputes and an increase in divergent legal systems. For international and regional actors facing dispute resolution in Asia it is therefore important to select arbitration as an alternative to formal litigation. This is particularly important because conflicting laws will usually arise in cases where parties from different jurisdictions encounter disputes. Even if the parties select a specific legal system to govern the contract there are bound to be other issues such as costs, enforcement and delays associated with international litigation. Recognizing the utility of providing a uniform standard of arbitration to accommodate commercial disputes of international characteristics, many Asian countries have subscribed to international arbitration convention such as the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention) under the auspices of the United Nations Commission on International Trade Law.6 Even so, there are a number of Asian countries that have not subscribed to the New York Convention, making it particularly important for international actors to proceed with caution in selecting an arbitration forum in Asia. This could make the difference between being able to enforce an award since countries not subscribing to international arbitration treaties will typical apply domestic laws to arbitration disputes, leaving enforcement up to a variety of legal issues such as national laws and their reciprocity provisions. Statement of the Problem Asia, headed by China, is an area with a number of legal jurisdictions with both inter-regional and international commercial transaction growing at a rapid pace.7 Globalization has already directed attention to the need for facilitating effective trade and commerce across borders by popularizing alternative forms of dispute resolution as a means of bypassing the extraordinary cost, duration and uncertainty of outcome associated with litigation.8 Given the diverse legal systems in Asia alone, the cost and complexities of litigation are no doubt a major consideration with respect to resolving commercial disputes that could arise in the course of doing business in Asia. More importantly, disputants want to obtain an immediate and effective resolution to their commercial disputes and this means ensuring that the method for alternative dispute resolution provides a means by which enforcement of the resolution is possible across borders. As Muchlinski argues, in a largely integrated world, jurisdictional disputes continue to heighten clashes between international parties involving international commercial disputes.9 The various jurisdictions in Asia, an area with ambitious international commercial trade incentives makes it imperative to not only opt for arbitration, but also to forum shop so as to avoid an arbitration forum that does not subscribe to international arbitration treaties. Otherwise, the arbitral award may be as difficult and as expensive to enforce as a foreign judgment. Statement of the Purpose The purpose of this research study is to highlight the significance of Asia’s commercial trade expansion in the context of international and inter-regional dispute resolution. In this regard, this research explores the advantages to opting out of litigation and choosing arbitration in resolving commercial disputes involving Asian parties. Focusing on the special legal, political and cultural aspects in that region, this research paper has as its goal exploring the significance of forum shopping among the various arbitration systems and centers in Asia. In order to achieve this purpose the research is framed in terms of a primary research question and sub-questions. Each of these questions direct the research methodology and also unmask the purpose of this research study. Research Questions As a preliminary issue, this research will approach the question of whether or not Asia or any parts of Asia are amenable to arbitration as an alternative to litigation. Once this preliminary question is researched and evaluated, the primary research question is explored. The primary research question is: What is the significance of selecting an arbitration forum in Asia? This question will necessarily require an exploration of the various legal systems in Asia, their respective arbitration laws and identifying the Asian jurisdictions that subscribe to various international treaties that regulate the enforcement of foreign arbitral awards. Additionally, the primary research question also commands specific attention to the question of whether or not arbitration provides a satisfactory method of dispute resolution in Asia and what kinds of provisions are made for international arbitration proceedings in Asia countries, and how are arbitrators selected or qualified. This question will be explored by reference to a number of sub questions which are summarized as follows: 1. Is arbitration an acceptable form of dispute resolution in Asia? This question will require some reference to the historical development of arbitration in Asia and empirical evidence of Asian participation in international forums. 2. Are there reservations about arbitration in parts of Asia? This question will necessarily require some research of the areas of Asia that have not subscribed to international arbitration treaties and research into why they have not. 3. What factors should be taken into consideration in selecting an arbitration forum in Asia? This question will be answered by reference to the political, legal and cultural factors that might have consequences for a fair and judicial process in Asia. The Literature Review The literature review will be used to demonstrate that arbitration provides a viable alternative to litigation in Asia. More particularly, Pryles’ Dispute Resolution in Asia will be used to provide background information on the legal system divergence in Asia and the potential for jurisdictional conflicts even among Asian nations in that region. This factor alone will make the case for careful selection of arbitration forums in Asia. In assessing the need for careful selection of arbitration in Asia, it is necessary to inform the reader of the various centers in Asia. In this regard, Pryles provides a comprehensive listing of the international arbitration centers in Asia. In this regard, his book Dispute Resolution in Asia will be used to identify those centers on a selective basis. The list of centers is exhaustive and it will not be possible to list them all. Therefore Pryles’ list will only be used for the purpose of making generalizations about the available forums. A report issued by O’Melveny and Myers LLP indicates that the growth in arbitration in Asia has grown exponentially over the last ten years.10 This report is used to demonstrate that there are viable and successful options for forum selection in international arbitration in Asia. The growth in international arbitration will serve as empirical evidence, although circumstantial in nature, of the success of arbitration and the acceptance of arbitration in Asia. Tied to this research is the significance of opting for arbitration over litigation in Asia. This will require a general look at the advantages of arbitration over litigation, a particularly important area of inquiry given the various legal jurisdictions in Asia. In this regard, the literature will be relied on to argue that arbitration is a persuasive form of dispute resolution in circumstances where diverse legal jurisdictions have a potential to clash. Michael Pryles’ The Case for International Arbitration will be used to argue that arbitration by nature is preferable to litigation primarily because it is less adversarial, less expensive and saves time.11 Tackaberry, Marriot and Bernstein’s Bernstein’s Handbook of Arbitration and Dispute Resolution Practice will also be used to further explore the cost and time advantages of arbitration. Likewise Arkin’s International Ad Hoc Arbitration: A Practical Alternative will warn of the significance in forum selection in Asia and elsewhere. Quite often the disputants, in selecting a forum will be required to choose between ad hoc or institutional arbitration. This means looking for a forum in Asia that is aligned to an international body which typically provides for centralizes proceedings and provides a convincing method for qualifying arbitrators. In selecting an arbitration forum in Asia attention will have to be paid to whether or not the system in Asia provides for liberal selection of arbitrators. As Kenneth Thronicroft explains this is one of the most attractive features of arbitration. Thronicroft explains that: Neither hypothesis (both drawn from criminologists’ studies of judicial sentencing patterns) applies all that well to the grievance arbitration process where, unlike in the court system, the parties themselves select their decision-maker.12 The literature review also reveals that the confidentiality factor also makes arbitration an appealing option for disputants. Arbitration also provides the parties with privacy and this gives them the advantage of conducting their business in the absence of public scrutiny.13 Confidentiality and privacy are perhaps two of the most distinguishing features of arbitration when compared to litigation.14 Confidentiality imposes upon the arbitrators a duty to protect information about the contents, documents and the award from public disclosure.15 This is because the arbitrator’s jurisdiction is conferred upon him by the disputants and its entirely private nature mandates that it s a matter entirely between the parties.16 Therefore, unless the parties agree, the arbitrator is not at liberty to disclose the essentially private information relating to the arbitration process.17 Each of these features of arbitration will be referred to and explores as a basis for forum shopping in Asia. Essentially, it will be argued that in seeking an arbitration forum in Asia it is important to examine the advantages of arbitration and then to determine whether or not these advantages are available in specific Asian Arbitration forums and where they are not. For example, Micheal Pryles and Michael Moser’s book The Asian Leading Arbitrators’ Guide to International Arbitration will be referred to argue that Asian Forums such as Singapore International Arbitration Centre and the Hong Kong International Arbitration Centre and various chapters of the International Chamber of Commerce provide a number of arbitration forums throughout Asia that offer many of the advantageous features that make arbitration particularly appealing to disputants.18 More importantly perhaps the literature review reveals that the New York Convention provides a method for the enforcement of foreign arbitration awards. In this regard, the New York Convention will be examined and reliance on Pryle’s Dispute Resolution in Asia will provide a reliable listing of the Asian countries that subscribe to the New York Convention. The possibility of obtaining an enforceable arbitral award from an Asian arbitration forum is an important factor for determining what forum to select in Asia. Research Methodology This is a comparative and exploratory research study. The comparative nature arises in comparing litigation with arbitration in the context of the methods for resolving disputes between international parties. The research study is exploratory because it studies the arbitration regime in Asian and examines its various facilities for hosting arbitration within its borders. This will require making both a qualitative and quantitative analysis of the research material. a. Qualitative Analysis In ascertaining whether or not Asia provides viable arbitration forum choices the research will review the literature on the exponential growth of international arbitration in Asia. The literature review will be used to form an objective argument as to why arbitration is preferable to litigation in countries where the legal systems are incompatible with international and inter-regional legal systems. Similarly, the literature review will be used to argue that arbitration is a viable form of dispute resolution in Asia although care must be taken as to what forum one selects for the dispute resolution process. Reliance will therefore be placed on a number of textbooks and peer-reviewed articles and journals that have studied the international arbitration processes in Asia. Similarly, these sources will be used to reveal the current status of international arbitration processes in Asia. b. Quantitative Analysis In order to determine the extent to which Asian countries subscribe to international arbitration practices recourse will be had to textbooks and journals that have documented these statistics. Empirical evidence of Asia’s international arbitration facilities will also be drawn form websites. Internet sources, are important in this regard because they can provide more current statistics than hard print sources can. Quantitative sources will also come from legislative provisions, particularly the New York Convention itself. Conclusion The primary purpose of this research is to determine what factors ought to inform the parties to an international commercial agreement when selecting an arbitration forum in Asia. There are a large number of resources analyzing the international arbitration system and the legal system in Asia. Therefore this aspect of the research is relatively easy to research. However, there has been very little empirical research conducted on the success and failure rates of international arbitration in Asia. In this regard, the research is limited by a lack of statistical information for comparative purposes. Moreover, there are a large number of different jurisdictions in Asia and it is impractical to conduct a thorough research of the individual arbitration forum facilities in Asian. In this regard, the research is confined to reasoned generalizations and selective approaches. Bibliography Arkin, H. (1987) ‘International Ad Hoc Arbitration: A Practival Alternative.’ International Business Law, Vol. 15: 5. Bantekas, I. (2008)‘The Private Dimension of the International Customary Nature of Commercial Arbitration.’ Klewer Law International. Vol. 24(4): 449-460. Buckley, K. (1971) ‘Arbitration – Its History and Process.’ Journal of Industrial Relations, Vol. 13(1): 96-103. Citchlow J. (2002) ‘The Authority of Arbitrators to Make Rules.’ (2002) 68(4) Arbitration: The Journal of the Chartered Institute of Arbitrators, Vol. 68(4): 369-388. Collins, S.; Bosworth, B. and Rodrik, D.(1996) “Economic Growth in East Asia: Accumulation Versus Assimilation.” Brookings Papers on Economic Activity. Vol. 1996(2): 135-203. Killion, U. (2006) A Modern Chinese Journey to the West: Economic Globalization and Dualism. Nova Science Publishers, Inc. McLean, D. (2009) “Toward A New International Dispute Resolution Paradigm: Assessing the Congruent Evolution of Globalization and International Arbitration.” University of Penn. Journal of International Law, Vol. 30(4): 1087-1097. Moser, M. (2007) “International Arbitration in Asia”. O’Melveny and Myers LLP http://www.globalarbitrationreview.com/reviews/2/sections/3/chapters/14/international-arbitration-asia/ (Retrieved November 11, 2009). Muchlinski, P. (2001) “Corporations in International Litigation: Problems of Jurisdiction and the United Kingdom Asbestos Cases.” The International and Comparative Law Quarterly Vol. 50(1): 1-25. Pryles, M. (2006) Dispute Resolution in Asia. Kluwer Law International. Pryles, M. (2003) ‘The Case For International Arbitration.’ AMPLA Yearbook, 2. Pryles, M. and Moser, M. (2007) The Asian Leading Arbitrators’ Guide to International Arbitration. Juris Publishing. Redfern, A. and Hunter, M. (2004) Law and Practice of International Commercial Arbitration. Sweet and Maxwell Limited. Solomon, C. (2002) “Selecting an International Arbitrator: Five Factors to Consider.” Mealey’s International Arbitration Report Vol. 17(10): 1-4. Tackaberry, J; Marriot, A. and Bernstein, R. (2003) Bernstein’s Handbook of Arbitration and Dispute Resolution Pracice. Sweet and Maxwell. Thornicroft, K. (Dec 1995) ‘Lawyers, Gender and Grievance Arbitration Outcomes.’ 8(4) Employees Responsibilities and Rights Journal. Vol. 8(4): 309-312. Troma, I. (2008)‘Confidentiality in English Arbitration Law: Myths and Realities About its Legal Nature.’ Journal of Internatonal Arbitraton, Vol: 25(3) 299-314. Tupman, W.(1989) ‘Challenge and Disqualification of Arbitrators in International Commercial Arbitration.’ International and Comparative Law Quarterly, Vol. 38: 26-52. Read More