An overview of International Arbitration: Agreements, Enforcement, and Key Differences between other means of settling international disputes

Abstract:

This article, will present how arbitration procedures are considered, and the most important requirement will be to consider whether the measures taken by the parties constitute arbitration or not India an example If one of the parties refuses to arbitrate, will he have the right to refuse or not and the challenges of the modern era to consider The agreement between the two parties to submit to arbitration through modern means of communication is taken into account and is considered an acceptance and affirmation between the parties or not.

In addition to that, the extent to which the decision arising from arbitration committees is mandatory (the enforcement of arbitration agreements) will be clarified, and some of the problems that will be raised about what if there are multiple countries in one arbitration decision, and some opinions on that problem. Finally, a distinction is made between international arbitration and other similar means, such as mediation, conciliation, and the judiciary in the country or international jurisdiction.

References were used through previous cases and signatures between countries and conferences. In addition, books and scientific research that were extracted from more than one place, not one place, were used.

Introduction:

International arbitration has become the main way of solving disputes between Individuals, corporations, and countries, and in about every way of international trade, investment, and commerce. Year after year the report established by the centers of arbitration raises its activity and current arbitration centers have been assembled to ride this new business wave. To be “arbitration friendly” countries have upgraded their laws to be seen and there are several conferences and seminars, accounting and legal businesses have created specialized arbitration teams, and the unique legal and international arbitration practice has become a subject for study in educational institutions and law schools.

Moreover, it would be not difficult to overlook that, the concept of arbitration in its origin is a simple one. Parties who are in disputing parties agree and approve of giving their disagreement to someone whose judgment or expertise they trust. Each of them presented his case to this person who considered, and listened to the arguments and the facts, and then made a resolution. These decisions are binding on all parties, and they cannot complain against them or violate them, it is binding because it has been agreed upon by the parties to be, rather than because of the country’s coercive power. In conclusion, it is an effective way of obtaining a binding and final decision on a dispute or series of disputes, without referring to the courts.[1]

Most of the time international arbitration is chosen by the parties through a contractual clause specifying the arbitration to be based and/or administered under the laws of a foreign arbitral institution or/and a foreign jurisdiction institution.

There is no doubt about the fact that the enforcement and recognition of arbitral awards is a main and essential element for prosperous arbitration. The two sides won’t observe the arbitration as an effective way to the country’s court proceedings if the resulting arbitral award will not be enforced with similar or at least equal effects.[2]

This article aims to clarify the essential elements of a valid arbitration agreement enforcement of arbitration agreements In one part and to clarify the problem that arises as to how to differentiate between international arbitration and distinguish it from other means of international disputes in the second part, and this is what will be discussed in the following.

Essential elements of a valid international arbitration agreement in India as example:

In India the Supreme Court has held that the main elements of a valid arbitration agreement are as follows:

• The arbitration agreement must be in writing. It is not permissible for it to be verbal. That is if one man agrees with another to take arbitration as a means to solve their problem, and that is within an oral framework, then neither party is responsible for implementing his obligation if it does not include a written agreement. There must be a present or future difference connected with a contemplated affair.
• A shown affair must be associated with a difference either future or present.
• The parties must approve the writing method to be binding by the decision of such tribunal.
• The parties must be at a meeting of the minds.[3]

The arbitration agreement is also considered written if it comes through an exchange of lawsuit and defense notes, where one party to the lawsuit says that there is an arbitration agreement between them, and the other party does not deny it. For example, but not limited to, the Supreme Court ruled that the bill of lading contains an arbitration agreement that was binding to them as the two sides had accepted to be confined by the terms of the bill of lading and an arbitration agreement must be in writing based on the Act. The contract containing the arbitration agreement must also be stamped in compliance with the Indian Stamp Act of 1899 in order for it to be enforceable​.[4]

The New York convention and the challenges of the modern era:

In addition to that, the issue was clear When the New York Convention was drafted. For the purpose of the convention, arbitration had to be based either on a written agreement or an arbitration agreement to which the parties have signed. This was a proposal during the 1985 Convention, this was a reasonable and workable proposition. But now things are not the same. There are two main issues. Firstly, telegrams and letters are no longer the main methods of communication there is a new way of communication that has moved beyond telegrams and letters: nowadays agreements are reached using technological ways, including electronic data exchange and emails or faxes. Secondly, only parties to an arbitration agreement are considered to be parties to any following arbitration under the convention. But, with the rising intricacy of nowadays international trade, individuals, corporations, and states who are not participants or members of the arbitration agreement may still choose to become parties to the arbitration.

Both the references to (the parties to a contract) and to an agreement (in writing) are kept up by the UNCITRAL Rules, which are heavily based on the New York Convention. Article  1 states that:

Where the parties to a contract decided in writing that arbitration under the UNCITRAL Rule would be used to resolve disputes pertaining to that contract, then these Rules will be used to the resolution of such disputes, with any change that the parties may agree upon in writing way.[5]

Article 7(2), however, expanded the meaning of “in writing” to encompass “an exchange of letters, telegrams, telex, or other means of telecommunication which provide a recorded of the agreement.”

Enforcement of arbitration agreements

The arbitrate agreement is like any other agreement, it has to be enforceable to the law or it will be like an intentional statement and will be morally binding but with the absence of the legal effect. However, an imperfect obligation contract is an agreement to arbitrate. If it is violated an award of damages is unlikely to be a practical remedy due to the difficulty of quantifying the loss sustained. In addition to that, an order for a certain performance is also unfeasible, It is not possible to subject or force a party to arbitration if the party does not want to do so.

This issue has been dealt with both internationally and nationally by a regulation of indirect enforcement. Law rules have been adopted to ensure that if a single party of an arbitration agreement brings proceedings in a domestic court in violation of that agreement, any other party to the arbitration agreement may request to halt such proceedings (until there is a good reason not to). This implies that if a party wants to pursue his claim with arbitration, to do it he must respect the terms of the agreement that was made, as this is the only legal way available to do.

There will be no benefit from implementing the obligation related to arbitration in one country. It is possible for a person to escape his obligation by filing a lawsuit in another country. So, as much as possible the international commercial agreements related to arbitration must be effective Internationally and not just in the area where the agreement was made in to make. The Geneva Protocol of 1923 is the first international accord to acknowledge this essential, if not basic, necessity. At the New York Convention, it was accepted.

The majority of countries, especially the developed countries, are parties and signed to the New York Convention. Therefore, in all parts of the world, the provisions can be implemented. Arbitration proceedings can leverage the authority of regional jurisdictions around the world due to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, also known as the New York Convention. The Convention allows for court recognition and enforcement of foreign arbitral awards.[6]

If a settlement is not reached between the two parties to the arbitration in the end, the arbitration panel will issue its decision under the umbrella and form of the arbitration decision. There are three basic points that must be mentioned: First, the final result of the arbitration process will be a decision necessary for all parties and not like in mediation, for example, which will be explained further in the following.

Secondly, the awards will be final, and it will not be like regular courts that accept appeals, for example, and there is no challenge or appeal here. Thirdly, when the ruling is issued, it will be immediately enforceable by the procedures followed by the court in this regard, an award differs from an agreement entered as a result of mediation or some other form, which is only binding contractually. An award’s international enforceability is also different from a court of law’s judgment because international treaties governing the enforcement of arbitral awards, like the New York Convention, are far more widely accepted globally than treaties governing the reciprocal enforcement of judgments”.[7]

The problem of conflicting awards:

Binding precedents in international arbitration do not have a system. Every ruling stands alone. For example, if the arbitration committee is asked to interpret things such as the insurance contract policy and its return, each arbitration committee will interpret it in its own way.

There was an investment dispute involving several undisputed facts, and this led to conflicting decisions from the arbitration bodies. This led to several proposals to establish a new international court to resolve disputes related to the implementation of arbitration awards; but this has been called “the impossible dream,” and the proposed international court must operate to act more like an appeals court than just an enforcement court in a case such as CME v. Czech Republic[8]. This would undoubtedly be in the interests of arbitrators and attorneys, who would appreciate uniformity in rulings; however, businessmen, who are primarily interested in finding a solution to a specific issue than in having the chance to make a personal contribution to the progress of the law, may find it objectionable.

How to differentiate between international arbitration and distinguish it from other means of international disputes:

The international arbitration system, as an alternative means of resolving international disputes, may differ from other means of resolving international disputes, as it is not the only means of resolving those disputes. Among these means are reconciliation, conciliation, expertise, and the judiciary. We will explain the difference between international arbitration and some of these issues below.

Firstly, the difference between reconciliation and international arbitration.

According to Article (2044) of the French Civil Code, which is one of the articles that summarized and succinctly defined the meaning of reconciliation, it defined it as (a contract by which the contracting parties settle an existing dispute, or prevent a potential dispute).[9]    )

A conciliation contract is similar to arbitration in that each is a means of settling disputes instead of the state’s judiciary. Each of them aims to end the dispute without the issuance of a judicial ruling, and each of them exercises its role in resolving disputes that have occurred or will occur.

However, they differ in that the conciliation contract includes an element of mutual waiver between the parties or parties of part of the claim or some of their personal rights. However, in arbitration, this element is not present, rather the dispute is presented to a third person or a group of people chosen by the disputing parties. The arbitrator also has powers. He is great at confronting both parties and applies the legal rules to the dispute presented to him, unlike the conciliator, whose role is limited to bringing points of view closer together.

Also, in reconciliation, the dispute is resolved by the will of both parties from the beginning of its conduct until its end, while arbitration takes place by agreement between the two parties, but they have no control over it after the start of its procedures and until the arbitration ruling is issued. In other words, the dispute in reconciliation is settled by contractual action.

They also differ on the other hand. For example, in a country like Egypt, the arbitration award may accept appeals through various methods of appeal according to the general rules. As for conciliation, it does not accept appeals through the methods of appeal prescribed for rulings, even if it is subject to invalidation or rescission according to the rules of civil law.[10]

Secondly, International arbitration and mediation.

Mediation and conciliation is referring the existing dispute between two countries to committees called conciliation. They are neutral committees whose mission is to pave the way for resolving this dispute by examining and identifying the facts. They have noted whether or not they are acceptable to the parties. They do not issue binding decisions, but rather present proposals whose validity remains pending. Acceptance by the parties.

Arbitration differs from mediation in that mediation is a system that the parties can withdraw from after resorting to it, unlike arbitration, which they cannot withdraw from before the end of the arbitration procedures and the issuance of a ruling. Also, the decision of the mediation committee is not binding on the parties to the dispute, and therefore the parties have the right to reject it or not adhere to it, as it is merely a recommendation. Or a proposal between us that the arbitration ruling be at the time of the parties to the dispute, and conciliation includes concessions from both parties to reach a compromise.[11]

Thirdly, International arbitration and judiciary

The judiciary is the state’s authority to settle disputes between adversaries and protect public rights. Despite the similarity between arbitration and the judiciary, arbitration is considered a means of judicial settlement, and the arbitrator issues his decision initially based on the law, as a judge. As for arbitration, it differs from the judiciary according to what jurists and international bodies have said, so the International Court of Justice went. Permanent in the explanatory memorandum states that there are three things that distinguish arbitration procedures from judicial procedures, which are the choice of the parties to the disputes for the court, the rules that the court must follow, and the optional nature of the arbitration judiciary. Moreover, arbitration requires the consent of both parties and the court, unlike the judge, who does not require the consent of the parties.[12]

Conclusion:

International arbitration plays an important and effective role in resolving cross-border disputes, and people prefer arbitration because it makes binding and quick decisions, so its decisions are made without the need or resort to the courts. Despite this, the effectiveness of international arbitration depends mainly on the enforceability of arbitration decisions and the mutual consent of the parties concerned, and this is what was covered above.

In this article, the place of international arbitration is clarified, emphasizing its inherent importance in resolving disputes between countries, individuals, factories, trades, etc. Of course, there is no place for international arbitration except by ensuring the implementation of its rulings and the enforcement of its decisions. Ensuring the implementation of the decisions issued by the arbitration committees assures the parties that the results of the arbitration will be recognized and implemented, which makes arbitration a viable alternative to court proceedings. How is this done and how are new challenges that arise and are dealt with? Finally, a distinction was made between international arbitration and other similar means, because not the majority can differentiate between them.

Reference(s):

Nigel Blackaby, Constantine Partasides, Alan Redfern and J. Martin H. Hunter, ‘An Overview of International Arbitration’ in Nigel Blackaby, Constantine Partasides and others, Redfern and Hunter on International Arbitration (Oxford University Press 2009), 6 [1]

[2] Mohamed F Ghazwi, Ahmad Masum, and Nurli Bt Yaacob, ‘Recognition and Enforcement of International Arbitration Awards: A Case Study of Malaysia and Saudi Arabia’ (2014) 4(2) International Journal of Accounting and Financial Reporting, 547

[3]Niti Dixit, Abhishek Tewari, and Raunaq B. Mathur, ‘International Arbitration: India’ (2nd ed, 2019) Chambers Global Practice Guide, p.5

[4] ibid

[5] An Overview of International Arbitration, Ibid, p15

[6] Bryan H Druzin, ‘Anarchy, Order, and Trade: A Structuralist Account of Why a Global Commercial Legal Order is Emerging’ (2014) 47 Vanderbilt Journal of Transnational Law 1049 (Chinese University)

An Overview of International Arbitration, Ibid, p27 [7]

CME v Czech Republic, Final award and separate opinion, (2006) 9 ICSID Rep 264 ^[8]

[9] Article (2044) of the French Civil Code

[10] Raafat Ibrahim Radwan Khawaldeh, ‘The Nature of International Arbitration and Distinguishing it from Other Means of Settling International Disputes’ (The Legal Journal, Zagazig University) 5449

[11] Ahmed Abdel Fattah Saqr, Settlement of Disputes through International Arbitration (1st ed, Al Wafaa Legal Library,2019) p. 23

[12] Ibid, ‘The Nature of International Arbitration and Distinguishing it from Other Means of Settling International Disputes, p5550