International Commercial Arbitration, Rules in International Arbitration - Essay Example

International Arbitration xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Rules in International Arbitration xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Name xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Course xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Course Instructor xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Date Submitted The ICA was founded in 1923 and is vested with the responsibility of ruling on economic disputes internationally. It mainly deals in offering solutions to trade differences between companies of different countries in an impartial, confidential, speedy process that is based on high legal competence. The court is perceived to have a decisive advantage in relation to its legal proceedings as it is able to competently offer solutions to trade disputes with immense speed. In addition, the parties have the liberty to choose the arbitrator, the venue of the hearing and the language through which the legal proceedings are to be communicated in and the decision of the court is definitive and legally binding. The ICA is different from the other domestic court as the members of the court make judgment of the matters that are submitted before it but rather the role is vested on the international arbitration institute but supervised by the ICA through the approval and confirmation of the arbitrators, deciding upon the challenges of the arbitrators and approval of the arbitral awards as well as fixing their fee (Croff, 1982). 1 The first section of the paper will purpose to provide a detailed discussion on the structure of the ICA proceedings in relation to the trade dispute at hand by proposing the site of the proceedings and proposing the number and the required qualifications of the arbitral tribunal. In addition, the paper will provide a detailed path through which the proceedings should advance and identify the procedural rules and suggesting the least costly method of accumulating evidence. Lastly, the section will propose the type of award that should be rendered by the tribunal and providing suggestions on the additional conditions that should be utilized. In relation to this dispute, the Claimant shall be my client who is the furniture boutique owner whereas the Respondent shall be the furniture supplier. The arbitration process will be conducted in an ad hoc as it will offer great flexibility since my client who is the Claimant is knowledgeable about court matters and is in great relationship with the local courts. The case will be heard in a different venue that is not the Respondent’s. This is to avoid the possibility of interferences from the local courts on the proceedings. The Claimant and the Respondent will have to arrive at an agreement on the entire frame work and the rules of the arbitration. This will include the choice of the procedural rules the location and the substantive rules that are to be applied in the proceedings. The parties will also agree on the number of arbitrators. The arbitration process will be tailored to meet their dispute. This will be able to cut down the costs of the arbitration processes to considerable amounts that my client will be able to comfortably handle. This process will be able to arrive at speedy conclusion as compare to the sponsored mode of proceeding (Danilowicz, 1986)2. Upon their agreement to have their dispute settled in the ICA court, the dispute parties are to request for an arbitration which has to be registered on the day it is received by the secretariat of the ICA court at the ICC. Upon the registration the ICA secretariat is to indicate the identity and the contact details to the counsel together with the other members of the team who are in charge of the dispute to the Claimant. The parties are to stipulate the law that is governing the convention in the adjudication clause the venue and the language that the parties intend to use during the proceedings. The number of the arbitrators that the company wants to be involved in the arbitration should also be included (Baniassadi, 1992)3. All the parties in dispute are to be provided with the written communication that is submitted by any party in sufficient copies. The arbitrators that and the secretariat that are in charge of the arbitration process will also be submitted with copies of the same. The secretariat shall make communication to all the concerned parties using the last address of the party in dispute or the agent for whom the same is intended. These communications shall be made either by registered post, telex, telegram, receipt or any other means of communication that was provided for by the parties involved or their representatives. The proceedings shall commence on the date following the specified date in accordance with the preceding paragraphs. If the proposed day falls on a non business or an official holiday, the proceedings shall commence on the first working day that follows it (Kurkela & Snellman, 2005).  4 The Respondent is expected to file a reaction to the claims within 30 days from the day he received the receipt that will inter alia contain: the full description of the Respondent, comments on the nature surrounding the complaints, the response to the claims and the response that is sought, comments as per the number and choice of the arbitrators and the lace, language and law they propose should be used in the arbitration proceedings. This should be in accordance to article 3 that is there in the number of copies that are supplied. It should be noted that the court can only grant the extension of the Respondent to file an answer to the accusations if the Respondent’s has filed comments concerning the choice of language, the venue to be used and the choice of arbitrators where it is required in  reference to the articles 8, 9 and 10 of the arbitrators nomination. The court is to proceed with the proceedings in accordance with these rules if the respondent fails to file an answer. The copies and documents of the Respondent’s answers provided are to be communicated to the Claimant by the secretariat. The counter claims if any that are provided by the respondent shall be filed. They shall contain, the description and the nature of the circumstances surrounding the dispute at hand from which the counter claims emanated and the statement of the relief that is sought by the respondent and an indication of the amounts that are being claimed if any (Hochstrasser, 1994).5 If the two parties agree to having submitted the arbitration under the laid down ICC rules, they are considered as having submitted ipso facto in accordance to the rules that are in effect from the date on which the arbitration proceedings are to commence. This is only made an exception if the parties agree to submitting to the rules in effect on the specific date that their arbitration agreement. If the Respondent fails to provide an answer to the claims submitted by the Claimant in accordance to article 5 that is provided the, or any of the parties raise a plea or more pleas that concerns the arbitration agreement’s existence, validity and/or the scope the court will or may decide to proceed with the arbitration without prejudice or meriting the pleas if it is prima facie satisfied that an arbitration agreement may exist under the prevailing rules. The proceedings are to progress even if the Claimant or Respondent fails to appear before the arbitration at any stage (Thomas & Zack 1997). Before the prospective arbitrator is confirmed, a statement of independence shall be presented to him for approval. In it the arbitrator has to disclose in writing the as to any circumstances of a similar nature that shall arise to call for the independence of the arbitrator. This has to be provided to the secretariat who shall fix the timing for any commencement from them. The arbitrator must remain independent to the parties in dispute during the whole arbitration process. It is the prerequisite of the Claimant and the Respond to agree and have arbitrators of their own choice. The court will only delegate the duties of an arbitrator of their choice if the two parties fail to agreeable solution to the choice of the arbitrators. In so doing, the decision of the court to confirm, challenge or replace an arbitrator is final upon which the reasons for the decision are to be communicated to the Claimant and the Respondent. The arbitrators are to carry out their duties in accordance with the stated rules. Since the Client and the Respondent are from two different nationalities, the arbitrators have to be conversant with the two main languages that are spoken in the two countries. The arbitrators need to be conversant with the laws of the two countries from which the parties in dispute originate from in addition to the laws that the dispute parties have chosen to be its venue. In addition, the arbitrators have to be of good reputation and must have a track record of representing companies in international arbitration as well as have good personal ethics. Since this is a scholarly profession, the arbitrator has to have a valid certification from internationally recognized institutions and certificates of good conduct from the country and the ICA. The code of conduct is vital as it is a definitive quality of a profession. If the Claimant and the Respondent fail to agree, the ICA has to decide on the need to have an appointing authority (AAs) as the parties will be acting bona fide. In this case the ex post facto by the two parties may be an attempt to delay the process of arbitration and thus frustrating the agreement (Elizabeth & Stienstra, 1996).6 As the Client and the Respondent originate from 2 different countries, there has to be a sense of neutrality on the venue where the proceedings are to occur. The parties may be apprehensive of the litigation in the court of the other disputed party’s country of origin as they will tend to belief the ruling will be in his favor. Concerns may also arise on the local party’s knowledge of the lex loci, lex fori, the environment in which the legal proceedings are taking place and the local litigation nuances and the language to use in the proceedings. In addition, the party might raise questions of the lack of knowledge by the retaining counsel in the matters of their business. In this case the international arbitration has to ensure the neutrality of the venue for the two parties. The ICA has to choose and confirm the arbitrators who are not only neutral but have to have a lex arbitri that is neutral. This will aim at eliminating the apprehension of imbalances during the whole process (Baniassadi, 1992).7 The rules on the choice and number of arbitrators stipulate the process to posses at least one arbitrator. Due to the high costs implications in the process the Claimant will have to make a choice of 3 arbitrators. On arbitrator need to have the knowledge of the trade laws of the countries of the parties in question and the commerce laws the venue of the arbitrary process. The other arbitrator has to have the knowledge of the commerce laws that govern the two countries from which the two parties originate from as well as the arbitration process laws (Peter, 1997).8 The Claimant will assume the electronic discovery/disclosure method in the collection and submission of the evidence to proof his case. The process will sought, locate and secure the documents and data that will be used as evidence in the court. The personal testimonies recorded from persons will be easily stored played and replayed if any clarifications are to be made. The collection and production of evidence will conform to article 1 of the International Bar Association (IBA) rules of evidence and also the disclosure of the electronic documents. The rules will also be applied in the interpreting of the evidence that the documents that have been presented for scrutiny. The arbitration tribunal is expected to take into account the contract provisions and the relevant trade usages. It is also to assume the powers of an amiable compasiteur or be able to offer decisions ex aequo et bono only if the parties in dispute have agreed to give the court such executive powers. No party is to make new claims or any other form of new counter claims after the terms of reference have been set and approved by the court. an exception to this can only be granted after the court has approved and ascertained the nature and the relevancy of the new placed claims or counter claims. 9The tribunal may at any time as they so wish call upon any party to offer additional evidence to the court that is in relation to the dispute (Lalive, 1987). On certain circumstances the court may decide to give a ruling on the dispute based on the evidence documents that have been provided by both parties unless any of the parties in dispute request a hearing. It is advisable that the court takes necessary measures to protect the stringent measures in to protecting the trade secrets and confidential information on the nature of the businesses of the parties in dispute. Such trade secretes could include transaction financial accounts, partners in the business and or the business strategies the parties employ in their trades. It is important for the Claimant and the party to note that the arbitration court is to take full charge of the process and all the parties in dispute are expected to be present. They are not to permit access to any party who is not involved in the proceedings. the parties may appear in person or send a representative who is authorized and may be assisted by advisers. It is however vital for the Claimant to note that the court will declare the case closed when both the parties will have presented their cases in a reasonable way. At this point, no further evidence will be permitted to be presented unless it is requested and authorized by the arbitral tribunal (Arfazadeh, 1994).10 The award is to be rendered by the arbitral court within 6 months. This time shall be counted from the time the last signature from the arbitral tribunal or by the parties of the reference terms in respect to article 18(3). The extension may only be offered if the court deems so if there is need for the award to be pursued. Since the dispute is represented by 3 arbitrators the award will be given by a majority decision. In case the majority is not reached the arbitral chair person will be able to give the award. The award in the dispute will be made at the place of arbitration and follow the date that will be stated. The Claimant and the Respondent will have to reach a settlement in accordance to Article 13 which will be recorded in form of an award. The award will be submitted to the court for scrutiny before a signature of authorization is appended on it. The approved award shall be communicated to the Claimant and the Respondent after the payment of the tribunal costs. The amount the Claimant will be seeking for an award will be equivalent to $800,000. This is a justified award as the reputation of the business is at stake and the Claimant has to purchase other furniture that will be used to reimburse the buyers who had complained of the poor quality of the furniture they had received from the Claimant’s furniture boutique (Arfazadeh, H, 1994). The second part of the paper will discuss the legal arguments that ABC and XYZ would likely raise for and against expanded review of the Award. Include a detailed review and evaluation of the possible review alternatives, if any, that could have been used by the Parties to provide a more complete and compliant review. Despite the limited grounds are set out on the sections 10 and 11 of the Federation Arbitration Act for the modification of the arbitration award disputes that arise in relation to the meaning and scope of the award may be presented through a request of interpretation by the party in dispute which will be addressed to the secretary general. This application shall be submitted to the tribunal that rendered the award. The proceedings shall follow up after a new tribunal has been constituted which is in accordance to the section 2 of article 51. The request could be stated to request for a discovery in to the nature that lead to the naming of the award (Martin, 2004). The application is to be set within 90 days of the after the party in dispute has discovered the fact and within 3 years within which the event of the rendering of the award. The annulment of the award may be directed if the tribunal was not properly constituted, manifested excessive powers, corrupt and seriously departed from the arbitral fundamentals. The process has to adhere to the ad hoc process of proceedings where its committee shall be appointed by the chairman. None of the persons who rendered the award will be suitable or permitted to form part of the ad hoc committee. The committee members are to be from different nationalities (Drahazol, 2000).11 The modification will be done on the arbitration if the award in the ABC and XYZ was conducted on undue means, corruption, fraud and if the arbitrators in the dispute were corrupt or are/were guilty of misconduct. The capital for the modification of the award shall be based on the article 53 which indicates that “the award shall be binding to all the parties and is not under subject to appeal or to any other remedy except for those provided for in this convention.” The modification can also be conducted on the basis that the arbitrators exceeded their powers through imperfectly executing the award. Section 11 of the FAA allows the parities to modify an award if there is evidence t o show material miscalculation in figures and description of the property that is in dispute. In the case of the dispute between ABC and XYZ the award is to be modified on the basis of imperfection in matter of form and not affecting the merits of the controversy in hand. The termination of the long term lease agreement on environmental concerns was approved but based on evidence that was erroneous. The agreement reached by the parties in dispute gave the court the leeway to be able to vacate the award on the ground that the fact findings were not fully supported by the collected and disclosed evidence thus, the conclusion that was given by the arbitrator was erroneous. The arbitrator upon review sort to make a ruling in favor of ABC based on the environmental statute (Hochstrasser, 1994). 12 The Supreme Court will grant a petition for certiorari in a 6-3 decision which is in agreement with the ninth circuit which provides the authority for the arbitration award to be modified if the enforcement is required under the accelerated review provisions of the FAA. The court will have to look into FAA’s sections 9-11 and will conclude that the grounds on to which the arbitration awards were designed exclusively and not for default provisions that permitted the parties to modify the contract. It will also be argued that the policies that favor the arbitrations limits the judicial review to just the required amount that will be able to sustain the virtues of the arbitration in resolving disputes (Baniassadi, 1992).13 The vacatur may apply if the parties seek the enforcement under the statutes of the state or the common law and not through the FAA’s expedited review. The agreement of the arbitration was entered in to as part of the litigation by the district court. In this case it is possible that the court was not clear whether the case was to be viewed as an exercise of the district court or be placed under the FAA review. The express provisions have limited grounds for the review process infra to an arbitration process. It also serves to identify the scope of the review that is desired. However, the FAA does not permit the scope of the review that the parties in dispute desire. XYZ is permitted to proceed with the appeal to have the arbitration award modified as it is a contracts creature. 14This reason may however be flimsy in as much as the arbitration process is set on contract, the textual features of the FAA are at odds thus are not able to expand the judicial review that follows the arbitration (Park, 1989). The process may be followed through the common law as the FAA is not the only option that the parties can seek for a review of the award. The common law provides a different arguable scope based on the articles 9, 10 all through to 11 that offer options to other possible avenues through which the parties can seek a review of the award. The results of arbitration are not final or conclusive and can be reviewed on the request of any party in dispute. In addition, despite the California Arbitration Act cal. Code Civ. Proc. §§1280 et seq having reservation to offering authority to the review of the arbitration unless the arbitration award was marred with irregularities and/or is in excess of the arbitrators powers. The act also gives the authority for a modification of the award if the award was given by prejudice (Buxbaum, 2001).15 In making vacation on the award under the 5th clause under subsection (a) the court has to order a hearing before newly appointed arbitrators. This has to be in respect to the agreement that is provided in accordance with section 3 and 4. The successors to which the rehearing of the case is to be presented should be appointed in accordance to section 3. The venue of the rehearing has to be changed to avoid the erroneous awarding by the arbitrators without reviewing the evidence that is presented before them. This is also vital as the cases of favoritism in respect to the parties will be avoided. The choice of a different venue in relation to the section 5 of the FAA is essential as it will be able to make possible the application of new rules that are governed by different states (Thomas & Zack, 1997). This will be able to have a realization of a new judgment on the arbitration issue as the expertise of different professionals in the arbitration process will have been put to test. The arbitration procedures would have avoided much if they would have postponed the hearing based on the substantial and sufficient cause being presented. This would have enabled the arbitrators to carefully assess the evidence that was controversial in relation to article 5 of the proceedings so as to substantially prejudice the party’s rights (Brand, Norman, Patricia, Thomas & Stewart, 1998). This would also have enabled the court to view the agreement that had to be presented to the team to be included in the proceedings under section 2 which would have insisted on getting the knowledge as to why the party in dispute did not actively participate in the proceedings without raising an objection towards the process. In cases where the arbitration will have been awarded on prejudice or on corruption grounds or the arbitrators exceeded their powers in the awarding, the application under this section is to be made within 90 days upon the delivery of the award copy to the applicant. This could also be made within 90 days upon the realization of the fraud or corruption cases that have been made. The court is to hear the dispute before new arbitrators who will be chosen as per the agreement between the two parties (Elizabeth & Stienstra, 1996).16 On the other hand, appeals may be made if the one or all the parties in dispute are on the idea of modifying the award. The notice of the notice to vacate or modify and award has to be served to the adverse party personally or through his lawyer within 3 months after the filing of the award. If the unfavorable party resides from the district where the award is being made, the service will done to the adverse given party or his/her attorney/lawyer as stated by law under the service of notice of the motion at hand in an action in the same court. If the party in dispute is not a resident the application notice will be delivered by the marshal of any district that is within which the party in dispute may be found in like manner as other process of the court (Wallace, 2002).17 During the hearing process, the newly appointed arbitrators are to choose the time and venue where the dispute is to be settled. This is to be done in not less than 5 days. Under the articles 33 and 34, the courts have the right to set aside the authorization of an award if it was conducted on the misconduct grounds. The court however is not expected to act on the process. The awards are binding to the parties and may only be challenged on the basis of fraud that is contained in the code 55-10-4. The application and the argument to have the appeal on the matter be raised would rest on the fact that the case was procured by undue means. This would include the possibility of partiality in the case of the arbitrators in the awarding process. The arbitrators in this case overstepped their powers on awarding. This implies that the circuit court should have the judgment order entered thus confirming the arbitration award and evidencing the fact of their being an improper imposition of interest. In such a case, the petitioner is likely to argue on the basis for a new hearing where the parties will be permitted to provide evidence that will enable them argue their cases. The Alleged errors Arbitration Award will fix the rules upon which the dispute is to be handled (Stipanowich, 2000).18 To add on to this, it will also be possible for the petitioner to argue that there was the application of improper prejudgment interest in which the process would have been given a red flag to the circuit court implying that the whole awarding process was faulty. This is evidence as the miscalculations of the interest of the award to be presented were calculated improperly (Goodman, 1993). In addition, the arbitrator’s misconduct can be out into question as it should have precluded the entry of the circuit court of the judgment founded on the arbitration award. The vacation of the award can be based on the fact that the arbitration process failed in its course in providing the best possible ways through which the case awards were scrutinized. This is the most important and vital part of the arbitration process as the ICA is to provide the awards based on their form. The awarding should be based on the matters of substance without affecting the liberty of the arbitrators in the making of the decision. This is to ensure that the awards are less susceptible to annulments if presented in the national courts. This provides the parties in dispute with a layer of protection that is not available in the cases of appeals. An award could be overturned if there is substantial evidence by the appealing party to indicate the total disregard of the law by the arbitrators (Haagen, 1999). This fits within the section 10 (a) (4) despite their being narrow definitions leading to the standard the rule showing the measure of how the parties can violet the law, the rule has been affirmed by many international arbitrators to avoid the possibilities and eventualities of the arbitrators to overstep their mandate and powers. References Arfazadeh, H, 1994, In the Shadow of the Unruly Horse: International Arbitration and the Public Policy Exception, 13 AM. REV. 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Drahazol, C, 2000, Commercial Norms, Commercial Codes, and International Commercial Arbitration, 33 VAND. J. TRANSNAT'L L. 79, 104. Elizabeth, S & Stienstra, D, 1996, ADR and Settlement in the Federal District Courts: A Sourcebook for Judges and Lawyers. Washington, D.C.: Federal Judicial Center. Garavaglia, M, 1991, In Search of the Proper Law in Transnational Commercial Disputes, 12 N.Y.L. SCH. J. INT'L & COMP. L. 29, 30-31. Goodman, A, 1993, Basic Skills for the New Arbitrator. Solomon Publishing. Gopalan, S, 2004, New Trends in the Making of International Commercial Law, 23 J.L. & CoM. 117, 117. Haagen, P, 1999, Arbitration Now: Opportunities for Fairness, Process Renewal and Invigoration. New York: American Bar Association Section of Dispute Resolution. Hochstrasser, D, 1994, Choice of Law and "Foreign " Mandatory Rules in International Arbitration, 11 J. INT'L ARB. 57, 81. Kurkela, M & Snellman, H, 2005, Due Process in International Commercial Arbitration, Oceana, p.128. Lalive, P, 1987, Transnational(or Truly International) Public Policy and International Arbitration, in Comparative arbitration practice and public policy in arbitration 257, 260-69. Martin, T, 2004, International Arbitration and Corruption: An Evolving Standard, TRANSNAT'L Disp. MGMT. Park, W, 1986, Private Adjudicators and the Public Interest: The Expanding Scope of International Arbitration, 12 BROOK. J. INT'L L. 629, 630. Park, W, 1989, National Law and CommercialJustice: Safeguarding Procedural Integrity in International Arbitration, 63 TUL. L. REV. 647, 649. Peter, J, 1997, Med-Arb in International Arbitration, 8 AM. REV. INT'L ARB. 83, 86 & n.21. Stipanowich, T, 2000, Commercial Arbitration at Its Best: Successful Strategies for Business Users: A Report of the CPR Commission on the Future of Arbitration, ABA Publishing. Thomas, D & Zack, M, 1997, Mediation and Arbitration of Employment Disputes. San Francisco: Jossey-Bass Publishers. Wallace, R, 2002,International Law. Sweet & Maxwell Ltd. Ware, S, 1999, Default Rules from Mandatory Rules: Privatizing Law Through Arbitration, 83 MINN. L. REv. 703, 720-21. Wilkins, D, 2004, From "Separate Is Inherently Unequal" to "Diversity is Good forBusiness ": The Rules of Market-Based Diversity Arguments and the Fate of the Black Corporate Bar, 117 HARV. L. REv. 1548, 1607. Read More