The Saudi Arabian Conditions and the Australian Conditions - Assignment Example

5.4 Conclusion 5.4.1 Efficiency of the Conditions Of Implementation And The Judicial Role On The Implementation Of Foreign Arbitral Award As indicated in the methodology section, efficiency in this analysis “means the effectiveness of these laws via the implementation of the provisions of foreign arbitral awards, the effectiveness of such laws to achieve the greatest degree of freedom for the parties to resort to arbitration and also to give a larger circle of freedoms in the area of arbitration”. Do the conditions ensure the purpose for which arbitration is sought is achieved? Comparison will be made between the Australian and the Saudi Arabian conditions of implementation of foreign arbitral awards and the role of the judges, to determine which conditions enable the laws to give more freedom and benefits to the parties in resorting to the arbitration as a peaceful method. The laws that provide more facilities for arbitration and supports the arbitration as a peaceful means of settling disputes is considered more efficient. The Saudi Arabian Conditions Do the conditions make the law efficient? International conventions and national laws have provisions that guide the implementation of foreign arbitration in countries. These provisions are the formal and substantive requirements that have to be made available by the judges. The role of the judge to ensure there are formal and substantive requirements of any foreign arbitration award are available however is affected by several factors and this affects the efficiency of the laws. In Saudi Arabian laws guiding the implementation of foreign awards factors that have affected efficiency are such as the decisions made by the judges that seem partial and the legal structure of the Kingdom’s judiciary. Saudi Arabian Administrative Courts’ (Sub-Circuits) relationship with the Courts of Appeal (Audit-Circuits) affects the application of the formal requirements as provided by the national laws and the international conventions. The Audit Courts are superior to the Sub-Circuit courts yet their discretion is not mandatory on the Sub-Circuits except under specific conditions outlined in the discussion above. The Sub-Circuits are free to choose their or the Audit-Court’s opinion if the rule of the Audit-Circuit’s provision is based on objective reason/s or the jurisprudence and the Audit-Court can directly take up a case if they are not convinced by the sub-Circuit’s point of view. It means that decisions by sub-Circuits can be overturned irrespective of their freedom to make their own judgment. This affects the efficiency of the laws guiding implementation of foreign arbitration since it reduces the speed of resolving the disputes and complicates more the process of solving disputes through arbitration. This is against the reasons for resolving disputes through arbitration otherwise resolution of disputes would just have been done through the courts directly. The principle of reciprocity is also another provision that reduces the efficiency of the laws. The courts are allowed to determine if the principle of reciprocity should be applied and there are no specific definitions of what documents should be submitted to prove the reciprocity. From the above discussion, Saudi Arabian Judges have not been fair to those seeking to prove the existence of reciprocity to their courts. Some of those who seek to prove reciprocity have been denied based on the type of proofs they provide, yet I believe if they were specified for the right documents needed to prove reciprocity, there would have been no issue of ‘the principle of reciprocity could not be demonstrated’. Such is the case of ruling No. 102 / T / 4 in 1429 AH (2009) and ruling No. 97 / T / 3 in 1411 AH (1991). There is also a problem in the condition dealing with disputes that have been solved by conciliation before being submitted for arbitration. Indeed if there is conciliation, there should not be any arbitration, but what if the agreements between the two parties are not honoured by one party according to the conciliation as well? There are no specified rules guiding judges on how to deal with such cases and one of the cases may have been unfairly judged. The case is where this ruling, No. 187 / T / 4 of 1426 AH (2006) was decided. Additionally, the process of solving the problem became long and existence of a reconciliation contract is also not a reason to reject enforcement of a foreign arbitral award unless considered to be contrary to public policy. This the judges did not consider. The decisions affect the effectiveness of such laws. Efficiency is also determined by the judge’s action in dealing with cases, specifically if the judge considers the merits of the case of arbitration award or not. In Saudi Arabia, it is stated clearly that “all the international agreements (the Arab, Gulf and the New York Conventions) have emphasised the inadmissibility of considering the merits of the case”. The inadmissibility is confirmed by both the old and the new Grievances Board’s president’s decisions. By not considering the merits of the case, the judges are encouraging arbitration, otherwise solving of disputes through arbitration would be the same as solving them in the courts following the normal procedures of the court leaving no meaning to arbitration. There is a condition that allows an appeal on the arbitration award if refused with a possibility of a second appeal. This condition could be a setback to the efficiency of the laws of foreign arbitration. By allowing parties to appeal and appeal again, the process of resolving the dispute is prolonged rather than dealt with once and for all. This appeal is permissible in both Saudi Arabia and Australia but its negative effects can be felt more in Saudi Arabia than in Australia because of the Saudi legal structure. Saudi Arabia has three degrees of litigation which are; the Administrative Courts as the first, the Administrative Courts of Appeals as the second and the High Administrative Court as the highest degree. Arbitration adds the next level making it four class litigation. Because of this, opting for the judiciary can be considered better than arbitration. If a foreign arbitral award is refused enforcement and a party (defendant) appeals and appeals again, how much longer has the process of solving the dispute been prolonged? In Saudi Arabia therefore, the level of effectiveness is reduced due some few conditions while a big number of the conditions positively support the laws of foreign arbitration hence efficiency. Its efficiency compared to Australia is low as will be discussed below. The Australian Conditions Considering the effectiveness of the laws, one can ask questions such as: are they used to implement the foreign arbitral awards? Do they achieve freedom? Is the purpose of arbitration achieved? Do the conditions make the laws effective, do they achieve greatest level of freedom and do they achieve the purpose of arbitration? In Australia, there are very few issues affecting the efficiency of the laws. The conditions are simpler and fewer compared to those of Saudi Arabia. There are nine conditions all which guide the judges in the implementation of foreign arbitral award and almost all of them have shown how effective they can be in implementing foreign arbitral awards. From the discussion, there are no rulings that can be considered biased or discouraging arbitration. Some which could even discourage arbitration have been dealt with in a manner that still encourages arbitration instead of the normal judicial procedures of settling disputes. Some of the issues are; the issue of the principle of reciprocity and consideration of merits of a case. When merits of a case are considered, the meaning of arbitration is lost and this can discourage people from going for arbitration as a way to solve their disputes. Australia had a case (LKT v Chun) where a defendant claimed that the arbitrator had exceeded the powers he/she was given by determining the joint and several liabilities. The judge read and evaluated the arbitration agreement and concluded based on the arbitrator made no mistake and was acting according to the provisions of the agreement (specifically cl 11.1 of the agreement). The judge’s analysis may have been considered as going into the merits of the case, but considering the defendant’s claims, the only way to determine arbitrator’s authority is by evaluating the arbitration agreement or clause. The principle of reciprocity is also a problem in Australia since there are no defined conditions that guide its application. Determination of reciprocity is left to the Australian courts (considering the case discussed above) of which according to the case presented above, the Australian courts determined that by themselves. There are no specified documents that should prove reciprocity or clear requirements stated by the Australian courts as requirements of proof of reciprocity. The case is however dealt with a simple way that encourages arbitration. Compare this to the Saudi way, where the courts seem to have specific requirements for proof of reciprocity, leave the burden of proof to the plaintiff and do not make clear the requirements to the plaintiff. One would go for arbitration in Australia and leave Saudi Arabia if an award could be enforceable in both countries. Australia has only two competent courts that can handle foreign arbitral award enforcement and these are; the Supreme Courts and the Federal Court. These courts have jurisdiction according to ‘the subject matter of the case and the value of the award and the procedural rules of the court’. This, as indicated above, allows foreign arbitral award enforcement cases to be appealed. The Supreme Court judgements can be appealed in the appeal court (three judges), the Federal court judgments can be appealed in the Full Court (three judges) and in some cases, the appeal court and the full court judgments can be appealed in the High Court of Australia. This makes the process of solving disputes through arbitration long just like in the case of Saudi Arabia. The difference may be in the levels where Saudi Arabia may have five if an appeal is made twice while Australia may have four if an appeal is made twice considering arbitration as a separate level. Australia has only two competent courts where foreign arbitration are handled making it level one, arbitration creates another level, the first appeal creates the third level and the second appeal forms the third level. Saudi Arabia has two court levels both of which have jurisdictions on foreign award arbitration but one has to audit the other’s decisions, that is, the Sub Circuits’ verdicts have to be audited by the Audit-Circuits making it two levels plus the arbitration, making it three levels. First and second appeals add the levels to five. The most important characteristic of arbitration is the speed in adjudicating the dispute, so with these kinds of procedures, such a characteristic may be lost. Australia has fewer and simpler conditions compared to the Saudi Arabian conditions. There are several Saudi Arabian conditions, the formal requirements plus provisions made by the Grievances Board President and so many other provisions as discussed above. 5.4.2 Justice To The Parties In The Individual Cases: Is there any justice considering the cases described in this research? Justice in this analysis means ‘assessing whether the law provided equal rights to the parties in the litigation proceedings, also means that it is not justice "in the arbitration" when the judge consider the subject matter of the case regarding to the recognition and the implementation of the foreign arbitral awards. So were equal rights provided to both parties in Saudi Arabia? Were Equal rights provided to both parties in Australia? Were there cases where the subject matters were considered in both countries? SAUDI ARABIA Saudi Arabia’s judicial jurisdiction defence is superior to other defences before the courts. This is as provided by No. 49 / T / 3 for the year 1418 AH (1998). There is no clear unfairness portrayed by this provision but this does not mean that it will not be unfair to specific cases. Almost all the rulings by the judges are fair according to the explanations given as to why the final rulings are accepted. In ruling No. 273 / T / 1-1411 H (1991) for example, violation of procedures is unacceptable and so the courts cannot allow that. Because of that, the administrative courts decided that any ruling that violates the procedures shall be overturned. There is nothing wrong with such a ruling and it is justice to the nation since there are procedures that form the law and the law guides the nation. Violating such laws will not help maintain order and if allowed, may be repeated (because of the existence of a similar case that was proved right) and in the end no order achieved. It may be referred to as violating public policy. Another example is ruling No. 231 / T / 4 of 1426 AH (2006), where the original documents were required but only a copy of the original award could be availed. It was ruled that the copy had not the executive force which is just and fair. Going back to the reasons for formal requirements, it is to justify the existence of such agreements and without all the documents and the status they are required to be, the foreign arbitral award implementation would have no legal meaning. A few cases have shown that Saudi Arabian courts do not give equal rights to both parties. A case of ruling No. 100 / T/ 4 of 1425 AH (2005), where the fourth circuit court did not provide any analysis to the use of articles 30 (b) and 34 (c) of the Riyadh Arab Agreement on Judicial Cooperation. The provision was issued in Egypt which is an Arab state but is not a signatory to Riyadh Arab Agreement on Judicial Cooperation. Why did it consider such provisions to a state that is not a signatory to the convention? The same error occurred in No. 137 / T / 4 of 1427 AH (2007) where Egypt was considered a signatory to Riyadh Convention on Judicial Cooperation while it was not clear if it was. The parties not given equal rights are the defendants to these cases and other cases that may be judged in the same way as these. Saudi Arabian courts’ inability to define and deal with reciprocity cases in a simple, just and fair way is also another issue contributing to unfairness. When the one seeking foreign arbitral implementation has been given the duty to prove reciprocity, he or she should be well informed of what the courts require to prove the reciprocity. This is not done by the Saudi Arabian courts; instead the party who seeks to implement the foreign arbitral award is left to resort to the general rules of evidence and proof. This is not fair since some of them are not accepted on the basis that they do not prove any reciprocity. Ruling No. 102 / T / 4 in 1429 AH (2009) where the party relied on general rules of evidence and proof was refused implementation by Sub-Circuit twenty on the basis that there was no legal or practical provisions. This ruling was overturned by the Audit court and the proofs submitted accepted. The Audit-Circuit stated that the Saudi Arbitration System did not require specific documents to prove the existence of the implementation of the reciprocity principle. Yet in another ruling, No. 97 / T / 3 in 1411 AH (1991), implementation was refused based on absence of proof of reciprocity. Ruling No. 187 / T / 4 of 1426 AH (2006), also shows some injustice because the plaintiff was supposed to be heard in a court based on the complications of the case but was not. One condition lead to a judgement that can be considered unfair since the plaintiff tried to solve the dispute through the legal ways but did not succeed. The first step was raising the issue in a fifth sub-circuit court where the case was cancelled because of absence of the defendant’s lawyers. The parties also reconciled outside the courts and the defendant did not commit to holding the reconciliation. The courts refused to implement the initial award based on the existence of the reconciliation. This may be right according to the laws but justice was not served at all. Among all the cases, there are no cases where the subject matter was considered. AUSTRALIA Australia has no cases where equal rights are not observed. All the cases mentioned in this chapter maintain the parties’ rights. There is a case where a defendant argued that the arbitrator had exceeded his or her power (The arbitrator’s gender is not indicated) in deciding the liabilities of the case. The judges had to go back to the conditions of the agreement to determine the truth. This defendant may have been arguing in this manner with the thought that the judges are not supposed to consider the merits of the case which makes him or her right but wrong considering the reason why the courts exist and why the arbitration implementation was taken to court. There was no other way for the judges to determine the role and power of the arbitrator except to analyse the provisions of the contract or the arbitration clause. Justice was served through that. It clearly shows what the Australian judges focus on. Another case that shows what the Australian judges focus on is Comandate Marine Corp v Pan Australia Shipping Pty Ltd [2006] FCAFC 192, where a valid agreement is not considered to be that which is formed or concluded by an act of signing or by the dispatch or receipt of a letter or telegram. This is an argument based on Article II of the IAA. The ruling describes what such an agreement is and how broad the interpretation of the convention is while considering the requirements of international commercial arbitration. There are cases where the court’s discretion is used to weigh evidence but justice is still achieved like in Altain Khuder LLC v IMC Mining Inc & Anor’. There is only one case with a slight problem (the problem of how to determine reciprocity) but which was still ruled justly: The case where the principle of reciprocity was applied (Comandate Marine Corp v Pan Australia Shipping Pty Ltd Finn). In this case, it is clear from the discussion that the court did not comment on how the reciprocity was checked although it pointed out the use of s. 7(1) (d), there was no indication of who bore the onus to prove reciprocity, and there was no indication of how the papers were examined to prove ratification with the New York Convention or not. There are no defined rules or requirements on how to assess reciprocity, but the courts may have checked the position of the parties without any request from any of them. There are no cases where discussions about the merits of the disputes were done. 5.4.3 Societal Values ‘Social values are the idea or feeling that drives a person or group to distinguish things and stuff and evaluate them to choose the best behaviour and make it a model’. Laws that provide: Justice and fairness for both parties and to achieve their interests and maintain their rights while maintaining social values and public order are therefore laws that have societal values. So have the Australian and Saudi Arabian laws achieved the two elements mentioned above? What societal values do the countries have? Considering the laws of the two countries these questions can be asked to determine the societal values: Is there justice and fairness in the Saudi Arabian laws? Are the interests of the parties achieved? Are their rights maintained? So are societal values maintained? As indicated earlier in the efficiency section and whether the laws are just and fair, most of the Saudi Arabian laws are just and fair. Take an example of ruling No. 231 / T / 4 of 1426 AH (2006), where the original documents were required but only a copy of the original award could be availed. Why would original documents be required? The answer is to prove that there was an agreement and that the agreement is valid. If such documents were not to be required, there would be no order; one because people would or may fake documents to present as agreement documents and two, so many people would be coming to court to resolve disputes that never existed. This just shows that laws are meant to maintain order which guides the society to do the right thing. Or it could be referred to maintaining morality. The public order contains the societal values and anything that affects public order affects the societal values. The Saudi Arabian cases mentioned above to be unjust and unfair are contributing to what that society has as its values. It may be considered unjust but then, it is just a few cases that have shown inequality. These cases have not achieved the interests of some parties, have not maintained their right and so have not maintained the societal value. From the majority of the cases presented and even logically, Saudi Arabia has laws of its own that aim at maintaining law or it could be referred to as maintaining societal values. So it cannot be concluded that the societal values do not maintain the rights of the people, do not achieve their interests or are not fair and just. In Australia, there are no cases shown to be unjust or unfair; or conditions under which foreign arbitration should be implemented that make the laws they affect unjust or unfair. All of the cases presented the interest of the parties have been achieved, (by this reference is given to the fact that justice has to be served and the one at fault has to be given what the laws provides he/she deserves), the rights of the parties are maintained and societal values maintained as well. Two case examples have been used to explain what the Australian Judges aim to maintain when handling cases. The cases are; Comandate Marine Corp v Pan Australia Shipping Pty Ltd [2006] FCAFC 192 and LKT v Chun all with rulings that indicate, Australian Judges are after maintaining law and order, justice and giving each party what it deserves according to the law. This does not mean that the rest of the cases’ rulings and the conditions of foreign arbitration implementation are not just, fair, do not maintain the public’s right and therefore do not maintain the societal value. As explained in the analysis Australian and Saudi Arabian conditions of implementation of foreign arbitration and the role of the judges, all the conditions have reason for existence which is to maintain public order. So all Australian conditions as depicted in the analysis encourage arbitration hence help achieve the aim of arbitration existence. Read More