International arbitration-Part 02

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 [edit] Neutrality and Enforceability of Arbitration Awards

The ability to resolve disputes in a neutral forum and the enforceability of binding decisions are often cited as the main advantages of international arbitration over the resolution of disputes in domestic courts. And there is solid legal support for this view. The principal instrument governing the enforcement of commercial international arbitration agreements and awards is the United Nations Convention on Recognition and Enforcement of Foreign Arbitral Awards of 1958 (the "New York Convention").^[9] The New York Convention was drafted under the auspices of the United Nations and has been ratified by more than 140 countries, including most major countries involved in significant international trade and economic transactions.^[10] The New York Convention requires that the states that have ratified it to recognize and enforce international arbitration agreements and foreign arbitral awards issued in other contracting states, subject to certain limited exceptions.^[11] These provisions of the New York Convention, together with the large number of contracting states, has created an international legal regime that significantly favors the enforcement of international arbitration agreements and awards.^[12]

As a practical matter, what that means is that an international award originating in a country that is a party to the New York Convention may be enforced in any other country that is also a signatory, as if that award were actually rendered by the domestic courts of that second country. Here is an example of this important concept: assume that parties from countries A and B have agreed to resolve their disputes in country C, and all three countries are parties to the New York Convention. This will mean that even though the arbitration will take place in country C, the resulting award can be enforced in countries A or B, as if it were a court decision rendered in the domestic courts of that country. (By contrast, there is no equivalent treaty for the international recognition of court decisions, although a draft treaty, Hague Convention of 30 June 2005 on Choice of Court Agreements, was initiated in 2005.)

Thus, parties to international contracts can decide to site their disputes in a third, neutral country, knowing that the eventual award can be easily enforced in any country that is a signatory to the New York Convention, which has been ratified by a significant majority of commercial nations (with notable exceptions like Iraq, which, not having ratified the New York Convention, cannot be assumed to give effect to arbitration decisions rendered in other countries). An international award therefore has substantially greater executory (legal) force than a domestic court decision.

Under the New York Convention, if a party to arbitration commences legal proceedings in breach of an arbitration agreement against another contracting party, the court is obligated to stay the proceedings. Chapter 2 of the Federal Arbitration Act sets forth the statutory basis for an American court to issue a stay in connection with contracts falling within the ambit of the New York Convention.^[13]

[edit] International Commercial Arbitration

The resolution of disputes under international commercial contracts is widely conducted under the auspices of several major international institutions and rule making bodies. The most significant are the International Chamber of Commerce (ICC), JAMS International, the International Centre for Dispute Resolution (ICDR), the international branch of the American Arbitration Association), the London Court of International Arbitration (LCIA), the Hong Kong International Arbitration Centre, and the Singapore International Arbitration Centre (SIAC). Specialist ADR bodies also exist, such as the World Intellectual Property Organisation (WIPO), which has an arbitration and mediation center and a panel of international neutrals specialising in intellectual property and technology related disputes. See http://www.wipo.int/amc/en/.

A number of arbitral institutions have adopted the UNCITRAL Rules for use in international cases.

The most salient feature of the rules of the ICC is its use of the "terms of reference." The “terms of reference” is a summary of the claims and issues in dispute and the particulars of the procedure, and it is prepared by the tribunal and signed by the parties near the beginning of the proceedings.^[14]