The Respective Merits of Arbitration under the ICC, LCIA, and ICSID - Essay Example

Running head: Running head: CRITICALLY ASSES THE RESPECTIVE MERITS OF ARBITRATION UNDER THE ICC, LCIA, AND ICSID Critically Asses the Respective Merits of Arbitration under the ICC, LCIA, and ICSID Insert Name Insert Affiliation Abstract In the arbitrary processes involved with International Commercial Businesses there are multiple avenues that can be found in order to settle unresolved disputes. Because of the expansion in International trade in past years and now currently in present, there is found to be a growing need for more services that entail arbitration so that quicker resolutions can be made and routine performance can be carried out without hindrance. These current issues have been discussed and implemented into the structure of this literary research. Also, there are a myriad of reasons why those in a binding contract seek to come to an agreement over their concerns through arbitration. These reasons could be: confidentiality, speed, enforceability of arbitrary awards, and in how easy it is to reduce any uncertainties when making a choice of an arbitrator and a forum (Wenger 2003-2004). These are also points of interest that have been included into the presented work. The conclusion that has been found will show that arbitrary services are a necessity to International Commercial Businesses and are relied upon heavily by many national companies. Critically Asses the Respective Merits of Arbitration under the ICC, LCIA, and ICSID The Role of the ICC in Disputes and Resolutions The ICC has recently undergone a restructuring and has had an extension of affiliates added as new members of its court. The total membership of the ICC is now at an estimated 122 which includes the positions of: chairman, nine vice chairmen, eighty six members, and twenty five alternate members (International Chamber of Commerce 2006). The court is truly vindictive of International brethren as a total of 86 countries are now representative within the court. The processes and procedures of the ICC are carried out every week as they review all cases that are before them and asses specific ones, designating arbitrators, fixing arbitration costs, and reviewing various drafted reports and awards submitted by arbitral tribunals (International Chamber of Commerce 2006). There are a number of legitimate reasons why arbitration is selected by many as a means to solving a dispute but first and foremost both parties must be willing to enter the process with good intentions rather than making the situation more complicated than what it already is. Also, the rulings passed down through the ICC's arbitrary process are final and absolutely binding, there is no changing a contract once an agreement has been reached. Furthermore, it is found that the awards reached through arbitrary processes allow for a broader international recognition than those that are passed down by national courts (International Chamber of Commerce 2006). In the arbitrary methods found within the ICC, either party or both can feel on equal ground in five mutually respective key areas which are: Place of Arbitration Language Used Procedures or rules of law applied Nationality Legal representation (International Chamber of Commerce 2006). These five key areas make the atmosphere for arbitration more amicable as there are no restrictions within the realm of language or nationality, so therefore there is no undue discrimination to be found in the process. This allows for establishing a totally neutral setting to allow for a fair hearing for both parties without any prejudices. Furthermore, the process is found to be swifter and far less expensive than old fashioned litigation procedures found within the basic court system. Basically, this process prevents appeals so it does away with any possibility of the case being tied up in the court system for a prolonged period of time, which saves both parties concerned a lot of additional time and money. There have been instances where awards as high as multi-million dollars have been awarded and totally completed in a time frame consisting of less than or right at two months (International Chamber of Commerce 2006). Another positive attribute associative with arbitration in the ICC is the fact that a choice is given to either party allowing the ICC to be the designating institution or to proceed outside of an institutional framework. These are known as 'ad hoc cases'. Even if this is the chose process by both parties, there are times were intervention by the ICC, or a state court is needed to provide assistance. The ICC will of course ensure that the arbitration is being supervised and administered correctly. The way in which they guarantee a fair and complete due process is by: Determining whether there is a prima facie agreement to arbitrate Decide on the number of arbitrators Appoint the arbitrators Decide challenges against arbitrators Ensure that arbitrators are conducting the arbitration in accordance with the ICC rules and replace them if necessary Determine the place of arbitration Fix and extend the time limits Determine the fees and expenses of the arbitrators Scrutinize arbitral awards (International Chamber of Commerce 2006). Many claim that it is the well organized structure of the ICC which makes it the worlds most chosen form of means in resolving International businesses disagreements. The Involvement of LCIA in Arbitration and Services it Offers This specific dispute system offers arbitration services to International Businesses also and happens to be one organization that carries the most apse form of longevity out of all the other institutions. It was initially established in 1892 which clearly depicts a concrete structure and well attuned service administration (Lex Mercatoria 1993-2005). Furthermore, this particular organization meets all the modern day requirements with the many up to date services that can be found within its affiliation. Also, like the ICC, this organization branches out world wide as well, providing many crucial benefits to businesses that are easily accessible when needed. Some of the most outstanding characteristics of the LCIA are: Universally applicable international mediation procedures A pool of International arbitrators and mediators of the highest caliber and expertise A membership of over 1000 International ADR experts worldwide (Lex Mercatoria 1993-2005). Though this institution is found to be based in London, it does not affect how precise it is when providing businesses with flexible and neutral services to assist in resolving any form of dispute that might arise between companies. In order to provide the quickest means to a resolution for a problem the LCIA has five councils to meet often changing needs of businesses, from all around the nation. These are publicly known as detailed in the following outline: LCIA European Council LCIA North American Council LCIA Asia-Pacific Council LCIA Pan-African Council LCIA Council this one in particular covers the areas of Central and Southern America and also includes the Caribbean (Lex Mercatoria 1993-2005). So, as it is undoubtedly interpreted, the LCIA is just as regionally significant as the ICC is although some of the protocols and procedures might differ to certain degrees. Rules and Procedures of the LCIA The rules that are found to make up the LCIA are conceptualized to be some of the most resounding and effective of the three tribunals in international dispute settling. There can be no partiality found within this system so therefore it is considered very fair and neutral to both parties involved, whoever they may be. Surprisingly, its location is of preference for most International consumers as London seems to hold a large choice of arbitrators and mediators who have a complete expertise in what is entailed in the resolution process (Graziado Business Report 2004). Also, it is well known that commerce businesses are often in disputes and need a good organized structure, with set rules, such as the LCIA has, in order to fully move through a swift and complete dispute and resolution process. The LCIA is competent in its abilities and the rules laid out are user friendly even though they are meant to be strict and have a designated purpose. Some of the rules in the LCIA are depicted in the following outlined paragraph: Any party wishing to begin an arbitration proceeding must send a written request to the registrar of the LCIA court, including all personal contact information of both parties who will be involved Within thirty days or a lesser period, which is fixed by the LCIA court, a written response will be received by the registrar containing a confirmation or denial, a statement summarizing any counter claims, and any comments due to any of the statements in the request should be attached as well Notices and periods of time will be established by the court for the arbitration process as soon as practicable after receipt of the response The LCIA court has the power to abridge or curtail any time limit to allow for the proper formation of the arbitral tribunal, also including service of the response and any other pertinent details or documents that might be missing or be delayed The LCIA court can claim a nominee for arbitrator unsuitable if there is found to be any form of partiality on the part of the arbitrator The LCIA can waive any parties right to a renomination of an arbitrator if it is not done so in a period of 15 days; following this period the LCIA will appoint the new arbitrator itself (London Court of International Arbitration 1998). When these specific institutions are critically reviewed in order to draw up a proper comparison between them and regular litigation proceedings in state courts, it is found that there is more than one area of the rules that have to be critiqued to provide a logical assumption into whether or not they prove to be more beneficial and time efficient to businesses or rather pose other problems in other technical areas of individual cases. In any particular arbitration there are several sets of various rules that dictate how arbitrary procedures will occur (Aaron 1991). Some of the institutional rules do take into consideration the timetables, statements necessary, witnesses, and other prudent information that is required to ensure a smooth outcome between both parties. However, certain provisions are always incorporated which regulate specific procedural matters; 1such is the reasoning for various rule stipulations in particular articles of the regulations among the different institutions. One area of adversity is the common knowledge that these institutions should not just build their rules around common law systems nor civil law inquisitorial systems but rather show favor in the realm of allowing both parties too select and utilize the most worthy features of both systems, by their own personal choices (Aaron 1991). The LCIA is a prime example of how adaptation to new practices take place as in 1981 it was found a new set of rules were needed to compensate for various changes and to better serve international businesses. 2 This lead to the renaming of the court from the London Court of Arbitration to the International London court of Arbitration, as well as a change to many of the old rules that were at one time upheld in this tribunal. Some of the updated regulations that could be found in the newer model of the LCIA structure in 1981 were: The arbitrator was given the power to make his own enquirers, as was deemed necessary The arbitrator relied on his own expert knowledge or if he felt it was needed he could appoint his own experts to assist him The arbitrator was allowed to choose what witnesses would be before him and he could question them in any order he felt was the most sufficient (Aaron 1991). Furthermore, different institutions still classify 3 business disputes in much the same way. However, the means each institution utilizes to resolve them might vary from a small fluctuation to an extreme difference of opinion in the way in which they find the mediating factor to correct the dispute. Before continuing on to discuss the ICSID, one largely differing facet of dispute settling that is found to be present between the ICC and the LCIA is in how the ICC only utilizes the inquisitorial system, or at least they use to only follow this structure. It is still found to be the heart of how the ICC initially begins a dispute hearing though and 4Article 14 clearly details this core function within the constraints of the ICC institution. Though this comparable difference is literally understood, it is still a logical assumption that any one of these institutions are going to have adverse areas that might not be totally favorable to the parties involved in the dispute. There is not one of them that can be totally perfect however it is found that each of their personal techniques meets with mutual satisfaction for those businesses who have utilized their services. The Role the ICSID Assumes in the area of Arbitration This institution was developed in 1966 for the sole discretion of resolving any disputes resulting from investments in international businesses. The president of the World Bank himself use to play a major role in mediating many of the issues that would arise but due to the burden becoming almost overwhelming the installation of the Settlement of Investment Disputes was formed (The World Bank Group 2006). The complete goal of this organization is that within the realization of offering services to help reach reconciliation in business matters that are international, it might also promote venues of international investments for the institution itself, so it's a mutually respectable asset to the world of international trade and investing for many national business organizations. The ICSID was initially structured from the 5 'Convention on the Settlement of Investment Disputes between States and nationals of other States' so it is actually an attribute for many foreign businesses to have the ability to utilize when there is a sufficient reason for doing so. Also, the institution is similar to the other two tribunals as it has a chairman, and an administrative council but its membership tally does not equal to the proportions of the ICC nor the LCIA because the membership is set up differently and possibly due to the fact that it is an autonomous organization as well. IT does however have a representative of each state to ensure equal representation for all and any parties involved in a dispute/resolution procedure (The World Bank Group 2006). Another variation of the ICSID is how voluntary the entire procedure is although once two or more parties enter into the arbitration process they can not withdraw their consent to continue forward regardless of any reason that might come up for doing so. This is considered to be an adverse condition of this institution although all and all it provides efficient and timely services for parties that end up utilizing it. Furthermore, any arbitrary awards that are passed down are enforceable and are expected to be recognized by all ICSID contracting states, whether they were involved in the parties' dispute or not, this is one of the basic rules of the implemented regulations the ICSID lies down before any arbitrary proceeding actually begins. 6 There are a number of contracting states involved with the ICSID, with 142 already having their names in the registry of the ICSID. There are also a good amount of cases that have gone through this organization and even some that can be seen as still pending in certain situations such as 7cases on construction of highways, requesting a new tribunal to assist in the dispute process, breached contracts, annulments being requested, and quite a high percentage of other cases that are easily accessible to review for the general public involved in international affairs. This gives a good idea into what types of disputes the ICSID is involved in and can handle in a precise and coherent manner, bringing fairness and showing no partiality to any party involved in the hearing. The ICSID has the power to pass down a variety of awards to the winning party of any dispute and these can vary from monetary compensation awards to awards established to reinstate a breached agreement. Also, the ICSID has very specific rules and regulations it goes by in order to guarantee a satisfactory outcome for all parties who bring their disputes before the ICSID institution. Some of these rules are as follows: General obligations are involving the request for arbitration, communication directly to the Secretary General, arbitrators being appointed by agreement and various other technical factors to begin the initial procedures There must be a method reached to constitute the tribunal if there is an absence of a previous agreement The constitution of the Tribunal is established by when the date is given by the Secretary General by notifying all parties that the arbitrators have accepted their appointment A replacement of arbitrators can take place at any time before the Tribunal is constituted, each party may replace any arbitrator appointed by it and the parties may by common consent agree to replace any arbitrator. This procedure follows rules 1, 5, and 6 (ICSID Convention, Regulations and Rules 2006). These are just a few of the rules noted within the ICSID's structure and they seemingly follow along many of the same rules as the ICC and the LCIA do. Basically, the majority of the initial rules between all three of these Tribunals are the same and they are all found to have been established to provide a much improved and organized structure for each of the institutions. In factuality, without the various rules and regulations of these institutions there would not be the well balanced organization of procedures within them to provide a resounding assistance to the constant changing needs of international commerce. In concluding, the ICC, LCIA, and ICSID all play imperious roles in assisting to resolve the percentage of international disputes that occur every year. Without the implementation of these institutions there would be no feasible way to assist international businesses with overcoming the problems that obviously exist in international business. Even if there is any controversy found within these organizations the positivism and satisfaction that comes from these establishments on resolving disputes satisfactorily outweighs anything else. All in all they are excellent services for the benefit of international commerce and trade businesses all over the world. References 1. Aaron, Sam (1991) International Arbitration IV: choosing an Arbitration Institution and a set of Rules 2. CMS McKenna, Cameron (2003) 'Model ADR Clauses' Retrieved on 9 January, 2006, from: http://www.adrgroup.co.uk/docs/model_adr_clauses.pdf 3. Graziadio Business Report (2004) 'Litigate or Arbitrate' Journal of Contemporary Business Practice Vol.7, No.3 4. International Chamber of Commerce (2006) 'International Court of Arbitration ' Retrieved on 7 January, 2006, from: http://www.iccubo.org/court/english/arbitration/introduction.asp 5. Lex Mercatoria (1993-2005) 'LCIA General Information' Retrieved on 8 January, 2006, from: http://www.jus.wio.no/lm/lcia/doc 6. London Court of International Arbitration (1998) 'Arbitration Rules' Retrieved on 9 January, 2006, from: http://www.law.berkley.edu/faculty/ddcaron/Documents/RPID%20Documents/cp04060.html 7. The World Bank Group (2006) 'International Centre for Settlement of Investment Disputes' Retrieved on 10 January, 2006, from: http://www.worldbank.org/icsid/about/main.htm 8. Wenger, Jean (2003-2004) 'International Commercial Arbitration: Locating the Resources' Retrieved on 7 January, 2006, from: http://www.llrx.com/features/arbitration2.htm#introduction 9. ICSID Convention, Regulations and Rules (2006) Retrieved on 10 January, 2006, from: http://www.worldbank.org/icsid/basicdoc/basicdoc.htm Read More