Relationship between Commercial Arbitration and National Courts - Research Proposal Example

Commercial Arbitration Procedures A survey of the relationship between Commercial Arbitration and National Courts Students Name Institutional Affiliation 1. CHAPTER 1 1.1 Introduction Arbitration also referred to as an independent enterprise of the countries judicial system is defined as a method used in dispute resolution that makes use of a third party in making the overall judgment of the dispute. The practice involves the agreement of the third party by both the conflicting parties with reference to a commercial document that is also agreed upon by the parties. The third party thus derives its powers from the commercial document that has been drafted by the parties. Arbitration can either be sort when there is an arising issue or it can simply be included as an arbitration agreement clause in the commercial agreement. The clause simply means that in case of a dispute the clause will come into play. This helps to clearly state the procedures that will be undertaken in the event of a disagreement between the parties (Hans, 2002). 1.2 Background of the study The most effective mechanism that has been used by in settling various disputes is arbitration. Since the ancient times in kingdoms such as Egypt, Greece and Rome arbitration was used due to the fact that it was cheap, fast, effective and convenient. These are the same reasons that modern parties have used arbitration. However, other more important factors such as privacy, control of the overall process by the parties and the ease from the binding nature of court rulings have drawn great importance to commercial arbitration. In practice, parties that have resorted to arbitration have a great need for speedy and efficient delivery of justice. Arbitration however has faced restrictions from the state as it feels like the process is denying it its sovereign right to provide justice through its courts. From as far as the 17th century the process of commercial arbitration has faced major challenges especially from the courts and from legislators who acted on the interest of protecting the sovereignty of the state. An example of such challenges can be witnessed in the English case of Scott v. Avery. In this case the Lord Campbell highlighted the fact that English courts were against arbitration due to the fact that judges received their fees from litigants. The judges thus strongly advocated for disputes to be settled within the courts in order for them to be able to get as much money as they could from the disputes. It is due to these hostilities and constant competition from the courts that conventions in support of arbitration emerged. Examples of the most influential conventions include; the Geneva Protocol of 1923, the Geneva Convention of 1927 and the New York Convention of 1958. These conventions had a positive mark on arbitrations as states adopted them and thus had little interference with arbitration proceedings. Legislations in England and the USA for example have agreed on the sanctity of commercial contracts thus giving great importance to the arbitration process. As an independent process arbitration provides the conflicting parties with an award whose enforcement is dependent on the national court. There is therefore an important relationship between the commercial arbitration mechanisms and the national courts. This research paper therefore aims at analyzing the importance of national courts to commercial arbitration mechanism. 1.2 Problem Statement The purpose of this research is to discuss the key roles and responsibilities of courts in protecting the commercial arbitration processes. The research will examine the different types of arbitration and the efforts made by the national courts in supporting these mechanisms. The research also seeks to explain the pro-arbitration attitude that has been adopted by the national courts through the various legislations that support the practice of arbitration. In order to achieve this, the research also looks deeply into the hostilities that were faced by the process of arbitration by the national courts. 1.3 Objectives of the study 1.3.1 General objective The general role of the study is to show the influence and the relationship between the commercial arbitration proceedings and the national court. 1.3.2 Specific objectives The study aimed at achieving the following specific objectives. i. To assess the role of the hostile nature towards arbitration of the past national courts in shaping the modern commercial arbitration proceedings ii. To find out the different types of arbitration mechanisms used by parties iii. To assess the pro-arbitration nature of the national courts iv. To evaluate the factors that supports the pro-arbitration nature of the national courts v. To assess the importance of arbitration to ensuring efficiency in the national courts vi. To predict the future of arbitration 1.3.3 Research Questions The researcher was guided by the following questions i. What effect did the previous hostile environment have towards arbitration? ii. What are the different arbitration mechanisms in use? iii. What is the attitude towards arbitration now? iv. What factors supported the positive attitude towards commercial arbitration by courts? v. What is the importance of commercial arbitration in ensuring efficient service delivery in the courts? vi. What is the future of arbitration in the national courts? 1.4 Significance of the study The study shows the importance of arbitration as a very timely, convenient and efficient method in solving disputes between two parties. The study thus highlights the history of arbitration process and the modern positive attitude towards the practice. The study will further help individuals in drifting from dependence on the judicial system of settling matters in court. The study will also enable legislators to employ the arbitration process in ensuring effective and convenient justice. 1.5 Limitations of the study The scope of the study is the major limitation of the study. The content concerning mainly the hostilities faced by the arbitration process is large and therefore there was need to choose on the most relevant and the highly influential legislations. 2. CHAPTER 2 2.1 Introduction to literature Review Literature review is identifies the relevant information that have been sort from a variety of studies that support the purpose and objectives of the study. This chapter will review the hostilities that were faced by arbitration, the different arbitration mechanisms and rise of the positive attitude towards arbitration. 2.2 Review of Past Studies There have been various incidents of hostilities by the national courts to arbitration. These hostilities started from ancient Rome when the arbitration process was not recognized by the courts. This forced the Roman merchants to develop a “Com-Promissum” also referred to as a double promise that gave room for compensation between the parties in the event that the arbitration was not honored. The double promise initiative provided the merchants with a way out from the frustrations of the court. The idea eventually spread England, France, Germany and also in the United States. In England the courts hostile attitude towards arbitration was evident from the various legislations that took existed. The English parliament enacted various acts in favor of the process but however they maintained the supervisory role that the court played in issuance of awards to the parties. The conflict between arbitration and the national courts in England came to an end with the introduction of the Arbitration act of 1996 that gave the arbitration procedures validity. The enactment also recognized the role of Arbitration tribunals in resolving conflicts. The Napoleonic Code of Civil Procedures of 1806 that restricted the use of arbitration came to an end in 1923 when the country adopted the Geneva Protocol which enabled parties to be able to arbitrate future disputes. The Napoleonic procedures initially did not allow for the provision of arbitration of future disputes in 1843 however through the Cour de Cessation it specified the issues that could be arbitrated in the future. The USA on the other hand enacted the Federal Arbitration Act that saw an end to the hostility towards arbitration. The act recognized the arbitration process unless the parties solved their issue without an arbitrary agreement. Commercial arbitration in Africa, Asia, Latin America and the Middle East also faced many challenges however most of these states became lenient after the adoption of the international arbitration rules that were set aside in the New York Convention held in 1958. Arbitration mechanisms The different arbitration mechanisms that are used by parties involve a. The arbitration Agreement This simply implies that arbitration is guided by a valid agreement between parties. According to the convention conducted in New York arbitration should be put in writing. The courts are expected to perform two duties which include firstly the determination of the validity of the agreement. The court examines the substance rather than the form of the arbitration. Secondly, the court refers different parties to arbitration. The court is tasked with enforcing the agreement between the parties (Redfern, 2004). b. The concept of Arbitrability This concept is supported by the ability of a dispute to be settled out of court. It is mostly dependent on the public polices of the different states. The function of the court is to decide whether the dispute can easily be settled through arbitration. This mechanism strengthens award enforcement and since there is a difference in public policies in different states. c. The concept of Separability This simply means that the arbitration agreement between parties is autonomous from the commercial contract. The court is made aware of this and thus recognizes it. d. The concept of competence-competence This basically is used to define the issues that will be arbitrated by the arbitral tribunal. The tribunal is autonomous and therefore is able to decide on its own competencies. This simply means that the tribunal has the capability of enforcing its own jurisdiction Change in Attitude of the courts The Geneva Protocol of 1923 was the main platform that provided for the change in the attitude of the courts towards commercial arbitration in England and the US. This followed by the Geneva Convention in 1927 that was meant to fix the limitations on the Protocol. The convention mainly focused on recognition of awards issued during arbitration by courts. This award was enforced by the courts and thus eliminated the issue of double exequatur. The New York Convention further in 1958 was able to remove the barriers of arbitrary process and thus aided in the growth of commercial arbitrary procedures. The increasing acceptance of arbitration laws throughout various countries has enabled its use as an alternative way in settling disputes amongst parties. Factors that support the pro-arbitration by national courts The recognition of enforcement of awards is a factor that greatly supports the process of arbitration. The issuance of the award settles the dispute between the two parties. In the event of a dispute and the one party fails to satisfy the award, the other party is allowed to revoke the enforcement of the award. Courts have the power to enforce awards that are related to issues in public policy. The other factor that supports the arbitration procedure is the courts recognition of the integrity of the process. The courts set aside awards on good grounds and only challenge the awards on grounds that a party violated the process. Importance of arbitration Arbitration is important because of its effectiveness and speed in solving disputes. Arbitration easily identifies the problem between trade disputes and effectively administers a straight and neutral judgment. Arbitration is independent and implies that the contending parties agree on solving the issue away from the court system that is time consuming. Arbitration moreover, is conducted at lower costs which are considerable lower than those of the lawyers and the Courts of Justice. The other importance of arbitration is that it is a private procedure. Files that are handled by the court process are usually open to public however in arbitration the parties agree on confidentiality and the arbitrators are neutral. Arbitration moreover, relieves the court of the spiteful nature of the parties in conflict. The decision to solve the conflict through arbitration eliminates the hostile nature of the conflict and thus the process also supports good relations amongst the parties. Future of arbitration International growth in commerce coupled with the growth in information and technological systems has globalized the world thus there is ease and adoption of money transfer system, technology and international trade. All these factors have helped in the growth of international commerce and thus arbitration will grow and be considered as the most effective way of solving disputes. Arbitration will therefore grow due to its ability to meet the various rising needs and aspirations of the current and future societies. 3. CHAPTER 3 RESEARCH METHODOLOGY The methodology used in this research aims at explaining the relationship between commercial arbitration and the national courts. The research compares the relationship in different countries in order to fully understand the importance of commercial arbitration. This section therefore explains the research design and the target population that have been employed. The section also provides the data collection instruments that have been employed and also the data analysis methods. 3.2 Research design The research employs case study research design to investigate the relationship between commercial arbitration procedures and the national courts. Case study research aims at investigating an event or a set of events that explain a certain phenomenon or interest. Data from case study design is mostly retrieved by documentations, interviews and participant observations (Hand, 2008). The advantage of using case studies includes is that it allows the researcher to collect data that is not readily available to other research designs. The data provided by case studies has greater depth compared to data from other research designs. Case study also advantageous in conducting research on rare cases such as commercial arbitration where there is lack of large samples of similar participants. 3.3 Target Market Inferences are made from an entire set of unit that is surveyed referred to as the population. The target population thus can be defined as the surveyed data that is relevant and which is included in the research work (Barbara, 2002). The population moreover provides the researcher with findings that he/she is meant to generalize. In relation to this research our target population involves the relationship between national courts and practices in commercial arbitration in England and the US. 3.4 Data collection and instruments Data collected was mainly through the analysis of past documents. This is the most commonly used type of data collection tool used. The most important advantage of analyzing past documents for data collection is that it provides the researcher with readily available information that he/she would face difficulties through finding them with other means. By using past documents the researcher eliminates the constraints that result from conducting interviews with unresponsive people. Using past documents also reduces the effect that the individual has on a person while conducting the research thus the data derived from it is reliable (Bowen, 2009). Documents are also very effective in analyzing changes of phenomenon over a period of time. They provide the researcher with the opportunity to collect data over a long period of time. Such data may not be available through use of questionnaires or by conducting interviews. In relation to this research documents provided the researcher with the opportunity to get past data concerning hostilities that faced the practice of commercial arbitration and also provided recent data concerning developments of commercial arbitration. The researcher through this information is able to clearly define the relationship between commercial arbitration and the national courts. Further advantages to conducting research through documentation are that it is a relatively cheap and convenient method. Documents can easily be obtained from accessible sources in the library or simply from the internet. Documents found through this way differ as some can extremely rich in detail concerning a research topic of discussion while some may be general and thus contain scattered information about the same research topic. The major disadvantage associated with collection of data through documents is that it is a time consuming practice. The researcher has to sit long hours behind a desk looking for relevant data to his/her study due to the nature of documents to containing missing data (Bowen, 2009). The other disadvantage is that information changes with time thus this makes it difficult for the researcher to choose which information is most relevant to his/her study. 3.5 Data analysis The data will be analyzed through coding. Coding is a process that involves data being placed in categories for analysis. The process is facilitated by use of computer software. The data is transformed by the software in a comprehensive form (Hay, 2005). The software used in this case is Microsoft Office Excel which will enable the researcher to easily interpret the data make conclusions and also make relevant recommendations. References: Hans, Van Houttee. (2002), The Law of International Trade, 2ed. London: UK, Sweet and Maxwell Redfern, A and Hunter,M. (2004), Law and Practice of International Commercial Arbitration, 4th ed.London, UK, Sweet and Maxwell Hay, I. (2005). Qualitative research methods in human geography (2nd ed.). Oxford: Oxford University Press. Hand, D. J. (2008). Advising on research methods: a consultant's companion. Huizen: Johannes van Kessel Publishing Barbara, Kitchenham. (2002). Principles of Survey Research: Population and Samples. Keele University Bowen. G. A. (2009). Document Analysis as a Qualitative Research. Emerald group Publishing Read More