Foreign Arbitral Award in Saudi Arabia and Australia - Assignment Example

Societal values It is prudent to define values in a societal set-up in order to gain a comprehensive understanding on the role of the courts in protecting the society from any foreign arbitral award that violates the public policy of a state, most notably in Saudi Arabia and Australia. Majority of the commentators have determined that the definition of the concept of value is endowed with ambiguity despite extensive efforts to define it1. This fact is supported by Castelfranchi and Miceli in their work A cogntivie approach to values2. However, in a generic sense, values have been perceived as trans-situational goals which are desirable in nature and which have variance in importance, serving as the steering principles in the life of an individual or the wider societal entity3. This definition has for some time formed the foundation of diverse discourses on the role of values in the society in different countries4. Societal values can thus be viewed as the principles, assumptions and beliefs which guide the decision-making process among people and the society’s actions. In the context of Saudi Arabia, Gorrill noted that the societal values in this country are strongly intertwined between the cultural orientation of the people and the predominant Islam religion in the country. In this regard, respect and dignity are key components of the wider Saudi Arabian culture5. In Australia, the values of respect of worth, self-determination of individuals, dignity, democracy, freedom, equality, wellbeing, responsibility, ethical culture and respect and care of the land are some of the often cited values embedded in this particular country, and play a major role in guiding the actions in the society6. In addition, every individual in Australia is expected to respect and uphold the principles and shared values in the country7. In both of these countries, the societal values play a fundamental role in determining the role of the courts in protecting the society from any foreign arbitral award that violates the public policy. This is based on the fact that in order for any sense of civilization to endure, the shared factors which define it ought to be safeguarded. This can only be achieved through the declaration of laws that conserve the rudimentary nature of the society, its institutions and values8. The legal system in Saudi Arabia is a peculiar one based on the fact that the Holy Qur'an and Sunnah are the primary representation of the principle of the ruling and legal systems9. This country assented to the 1958 Convention (New York Convention) on the Recognition and Enforcement of Foreign Arbitral Awards through a Royal Decree in 199410. Nonetheless, despite the fact that Saudi Arabia acceded to the 1958 convention, the Kingdom has failed to enact any domestic implementing regulations and has to a wide extent appealed the ‘public policy’ exceptions in prior cases11. According to the Financier Worldwide Limited, the government entities in the Kingdom have been forbidden by the Royal Decree since 1963 from succumbing to systems for international dispute resolution or the eventual choosing of any foreign law to be central in the governance of a dispute, absent of a particular relinquishment from the Council of ministers11. In the arbitrations based in the country, a number of arbitrators might be engaged provided that the number is odd. There are several prerequisites for this arbitrator (s). Firstly, the arbitrator(s) must be nationals of Saudi Arabia or expatriate Muslim(s) or, with prior endorsement, employee(s) of the Saudi Arabian government. In addition, the parties are at liberty of representing themselves or being represented by a lawyer12. In regard to the protection of the societal values in foreign arbitral award, Al-Jadaan & Partners Law Firm cited that the judicial committees and courts in Saudi Arabia might fail to respect provisions which are related two issues. Firstly, the submission by the parties which are bound by a contract to non-Saudi jurisdiction and secondly, the selection of non-Saudi law as the basic governing law of the contract12. This is based on the fact that the distinct public interest among members of the Saudi population which are founded on the peculiar societal values in the country might be overran if the judicial system fails to consider the them in the process of enacting foreign arbitral awards which are based on foreign laws. On the other hand, Nell noted that just like Saudi Arabia, Australia is a signatory of the New York Convention but has advanced in its signatory of the Model Law, both of which have been exclusively been entrenched in the Australian domestic law. This is primarily through the provisions of the International Arbitration Act 197413. Monichino noted that Australia has been in the extensive process of initiating substantial reforms in its arbitral legislative regime which is key in the regulation of both domestic and international arbitrations14.This reform in the Arbitration Law has been perceived by diverse commentators as the first step aimed at elevating the utility of arbitration in Australia15. Based on the basic fact that Australia is a common law country with a profound hybrid of statute law and case law is bound to experience extensive internationalization16. This is projected to pose advanced effects on the enforcement of foreign arbitral awards in the country both at the present and in the future. In this regard, the courts in Australia are more open and proactive to the enforcement of foreign arbitral awards when juxtaposed to Saudi Arabia. Against this backdrop, an award which fits within the jurisdiction of the New York Convention is usually recognized as being binding on the involved parties and may thus be effectively enforced in any court of an Australian territory or state, just in the same way if it had been genuinely made in that territory or state16. On the other hand, international arbitral awards which fall outside the jurisdiction of the New York Convention usually have their enforceability embedded under the Model Law or on other legislations which govern the enforcement of foreign judgments, or in the extreme cases, the common law16. In regard to the protection of the societal values, Ma noted that the judicial system in Australia has provisions connected to the protection of public interest, which is predominantly founded on the public policy provisions. Therefore, despite the inherent prosperity of the judicial systems in other countries in the enforcement of foreign arbitral awards, the courts in Australia usually deny the enforcement in instances where it is essential and suitable. This can be best epitomized in a situation where the eventual enforcement would result or overlook injustice aimed at undermining the integrity of the arbitration process. Thus, the enforcement is deeply entrenched in the side of justice which is one of the most regarded societal values in the country16. Therefore, it is apparent from the above discourse that the enforcement of international arbitral awards in both countries usually considers the societal values which guide the nature of actions in these societies. This is because profound consideration of the novel nature of specific societies is fundamental in the successful enforcement of these awards17. Justice to the parties in the individual cases Justice has often been identified as the oldest virtue in the history of mankind18. Oxford dictionary defines justice as a just behavior or treatment19. In this regard, justice to the parties in individual cases can be perceived as the treatment of these individuals or collectives in a just manner. Justice is often associated with fairness and equality. This concept is very integral in the international arbitral award. It is imperative to note that majority of the arbitral awards, both domestically and internationally are voluntarily conformed to and thus do not necessitate judicial enforcement. However, it is solely if an arbitral award can be sufficiently enforced that a successful claimant can ascertain that it will essentially recover the damages awarded it20. Most commentators have pointed to the fact that justice to the parties in the individual cases is fundamental in any international arbitral award. This fact is supported by Lalive who determined that justice in arbitration ought not only to be done but it ought to be seen manifestly and undoubtedly to be done21. In Saudi Arabia, there is a divergence in the dissemination of justice to the parties in individual cases, for instance, a foreign judgment in a country that is not a member of the Arab League Treaty might be presented to the Board of Grievances for the purposes of enforcement. Against this background, the board can opt to enforce either all or part of the judgment based on two rationales. Firstly, provided that the judgment does not contravene the laws and regulations of the country or the general Islamic law, and secondly, provided that the judgment creditor can sufficiently prove to the board that the courts of the area that granted the judgment will eventually enforce the judgment of the Saudi Arabian courts in such foreign jurisdiction in a reciprocal manner12. In Australia, Digby determined that the country to a large extent embraces international arbitration which is best exemplified by the fact that it has in the recent years revitalized its commitment to the Convention on the Recognition of Foreign Arbitral awards. This has been through the modernization of the provisions as outlined in the Arbitration Act 197422. As previously mentioned, diverse commentators have cited that the future of international arbitration in Victoria and the wider Australia is robust and feasible. In regard to justice to the parties in individual cases, it has been pointed out that it is an explanation why countries with common laws like Australia and, among other leaders of arbitration in the global scale like Britain and Singapore, have made extensive efforts in the provision of not only the certitude necessary for the efficient enforcement of international arbitral award, but also the flexibility to comprehensively accommodate the prerequisites of justice in circumstances which are unusual22. It is imperative to explore why it is unfair to the parties if the courts engage in the discussions of the merits in specific cases which were decided by arbitrators. According to the National Arbitration Forum, there is extensive rigidity in the traditional litigation process based on the fact that the judge if bound to follow applicable law and the constraining deliberations of appellate courts23. Nonetheless, the arbitration process is endowed with more flexibility based on the fact the parties involved priory agree on the procedures and thus this process considers the peculiar realities in relation to the dispute, for instance, societal values, financial factors among other. Against this background, if the court discusses the merits in specific cases which were decided by arbitrators, it would be unfair to the parties because the courts may overlook some of these factors which will culminate in injustice. Secondly, some of the cases decided by arbitrators are endowed with extensive privacy due to their confidential nature. This fact is supported by Ligeti who determined that in the recent decades, confidentiality has evolved to become one of the most important subjects in international commercial arbitration24. This is chiefly embedded in the Article 15(4) of the Rules of the International Chamber of Commerce (ICC) which clearly states that unless there is a prior agreement by the parties and the arbitrators, persons who have no any involvement in the arbitration process shall not be admitted25. Nonetheless, if the court processes like litigation discuss the merits in specific cases which were decided by arbitrators, mostly those endowed with extensive confidentiality, the privacy of the disputes is bound to be compromised sincelitigation does not prohibit participation and involvement of the third parties26. This is bound to be extremely unfair to the parties and might result in the course of justice being compromised. However, it is imperative to note that the national courts play a more profound role in the implementation of arbitral awards in regard to confidentiality27. Thirdly, the eventual discussion by the courts on the merits in specific cases which were decided by arbitrators will result in added cost to both parties involved in the dispute which will not be fair. This is based on the fact that court processes like litigation are endowed with high costs which in many cases don’t consider the financial capacity of the conflicting parties28. In this regard, the court proceedings after the deliberations by the arbitrators will lead to additional legal cost which both parties or one of the parties might not be incapacitated to raise which is bound to affect the course of justice. In addition, the discussion by the courts on the merits in specific cases which were decided by arbitrators is bound to culminate in time wastage in the final delivering of justice to the involved parties29. This is because the courts will spend more time discussing on issues which were already deliberated by the arbitrators which will just result in the delay of justice to the parties which according to Krishnan and Kumar, justice delayed is always justice denied30. The eventual referral of specific cases that had previously been decided by the arbitrators to the courts is bound to create a backlog of cases which will gradually reduce the efficiency of the legal systems. In the long-run, this will culminate in enormous unresolved cases which will not only be unfair to the parties involved by will also pose detrimental impacts on the credibility of the judicial system. This applies to countries which predominantly use the Islamic law like Saudi Arabia as well as those which have common laws like Australia. Conclusion From the above discourse, it is apparent that courts play a fundamental role in protecting the society from any arbitral award that violates the public policy of diverse states, which is chiefly embedded in the societal values. Nonetheless, there is some intrinsic variance in regard to the role of the courts in fulfilling this mandate based on the legal orientation of different countries. This is best epitomized by Saudi Arabia and Australia as explored in the preceding analysis. In addition, justice in the judicial processes which is directly related to the equality of the individuals and collectives in receiving the protection of the court despite the diversity of their characteristics is paramount in both countries. Nonetheless, the above analysis has evidenced that the tendency towards permitting the courts to discuss the merits of specific cases which were decided by arbitrators is bound to pose diabolical impacts on the course of justice in terms of overhead costs, time wastage and confidentiality breach among other detrimental impacts on the disputing parties. Bibliography ALBERT M, Arbitration Reforms in Australia: Striving for International Best Practices, (‘Challenge and Change’ Conference, 2010, Christ Church: New Zealand, 2010). AL-JADAAN & PARTNERS LAW FIRM WEBSITE, ‘Overview of Saudi Domestic and Foreign Corporate laws’, Al-Jadaan & Partners Law Firm (Web Page) (2012) , Accessed 30th June, 2012. ARTHUR. M,The Advantages and Disadvantages of Arbitration as Compared to Litigation (Los Angeles, California: The Counselors of Real Estate, 2008). CASTELFRANCHI, C., MICELI, M,‘A cogntivie approach to values’,Journal for the Theory of Social Behaviour 19/2 (1989), 170-193. 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