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DIPLOMATIC ACADEMY OF VIETNAM FALCUTY OF INTERNATIONAL LAW INTERNATIONAL DISPUTE SETTLEMENT THESIS ARBITRATION – A GOOD CHOICE FOR DISPUTES WITH ECONOMIC AND COMMERCIAL NATURE Student: Nguyễn Thị Thúy Mai – C34 Hanoi 10 2010 ii TABLE OF CONTENTTABLE OF CONTENT TABLE OF CONTENT TABLE OF CONTENTTABLE OF CONTENT TABLE OF CONTENTTABLE OF CONTENTTABLE OF CONTENT TABLE OF CONTENT TABLE OF CONTENT ....................................................................................................................... ii TABLE OF ABBREVIATION ........................................................................................................... iii BIBLIOGRAPHY ............................................................................................................................... v INTRODUCTION ............................................................................................................................... 1 ARBITRATION – A GOOD CHOICE FOR DISPUTES WITH ECONOMIC AND COMMERCIAL NATURE.................................................................................................................. 2 I. DEFINITION OF ARBITRATION ......................................................................................... 2 II. ARBITRATION COLLECTS ADVATAGES OF THE OTHERS ......................................... 3 1. THE EFFECTIVENESS OF THE COURT ............................................................................. 3 2. ADVANTAGES SHARED WITH DIPLOMATIC MEASURES .......................................... 4 a. FLEXIBILITY AND ECONOMY ...................................................................................... 4 b. CONFIDENTIALITY ........................................................................................................ 5 III. HIGHLY SIGNIFICANT ADVANTAGES OF ARBITRATION ...................................... 6 1. A CHOICE OF NEUTRAL FORUM AND A NEUTRAL TRIBUNAL ................................ 6 a. NEUTRIALITY OF THE FORUM.................................................................................... 6 b. NEUTRAL AND APPROPRIATE TRIBUNAL ................................................................. 7 2. ENFORCEMENT OF ARBITRAL AWARD ......................................................................... 8 CONCLUSION ................................................................................................................................... 9 iii TABLE OF ABBREVIATIONTABLE OF ABBREVIATION TABLE OF ABBREVIATION TABLE OF ABBREVIATIONTABLE OF ABBREVIATIONTABLE OF ABBREVIATION TABLE OF ABBREVIATION TABLE OF ABBREVIATIONTABLE OF ABBREVIATION TABLE OF ABBREVIATIONTABLE OF ABBREVIATION Abbreviation Explanation % Percent 3rd Third 5th Fifth ADR Alternative Dispute Resolution ASEAN Association of South East Asian Nations CIETAC China International Economic and Trade Arbitration Commission Council Regulation 442001 in Europe European Council Regulation No. 442001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters e.g. Exempli gratia (for example) ed. Edition etc. et cetera (so on and so forth) i.e. Id est (that is) IBA International Bar Association ICDR International Centre for Dispute Resolution ICSID International Center for Settlement of Investment Disputes ICSID Arbitration Rules ICSID Rules of Procedures of Arbitration Proceedings, 2006 edition ICSID Convention Convention on The Settlement Of Investment Disputes Between States and Nationals of Other States Inc.
DIPLOMATIC ACADEMY OF VIETNAM FALCUTY OF INTERNATIONAL LAW INTERNATIONAL DISPUTE SETTLEMENT THESIS ARBITRATION – A GOOD CHOICE FOR DISPUTES WITH ECONOMIC AND COMMERCIAL NATURE Student: Nguyễn Thị Thúy Mai – C34 Hanoi 10/ 2010 ii TABLE OF CONTENT TABLE OF CONTENT ii TABLE OF ABBREVIATION iii BIBLIOGRAPHY v INTRODUCTION 1 ARBITRATION – A GOOD CHOICE FOR DISPUTES WITH ECONOMIC AND COMMERCIAL NATURE 2 I. DEFINITION OF ARBITRATION 2 II. ARBITRATION COLLECTS ADVATAGES OF THE OTHERS 3 1. THE EFFECTIVENESS OF THE COURT 3 2. ADVANTAGES SHARED WITH DIPLOMATIC MEASURES 4 a. FLEXIBILITY AND ECONOMY 4 b. CONFIDENTIALITY 5 III. HIGHLY SIGNIFICANT ADVANTAGES OF ARBITRATION 6 1. A CHOICE OF NEUTRAL FORUM AND A NEUTRAL TRIBUNAL 6 a. NEUTRIALITY OF THE FORUM 6 b. NEUTRAL AND APPROPRIATE TRIBUNAL 7 2. ENFORCEMENT OF ARBITRAL AWARD 8 CONCLUSION 9 iii TABLE OF ABBREVIATION Abbreviation Explanation % Percent 3 rd Third 5 th Fifth ADR Alternative Dispute Resolution ASEAN Association of South East Asian Nations CIETAC China International Economic and Trade Arbitration Commission Council Regulation 44/2001 in Europe European Council Regulation No. 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters e.g. Exempli gratia (for example) ed. Edition etc. et cetera (so on and so forth) i.e. Id est (that is) IBA International Bar Association ICDR International Centre for Dispute Resolution ICSID International Center for Settlement of Investment Disputes ICSID Arbitration Rules ICSID Rules of Procedures of Arbitration Proceedings, 2006 edition ICSID Convention Convention on The Settlement Of Investment Disputes Between States and Nationals of Other States Inc. Incorporated iv JCAA Japan Commercial Arbitration Association LCIA London Court of International Arbitration Model Law UNCITRAL Model Law on International Commercial Arbitration 1985 with amendment adopted in 2006 NAFTA North American Free Trade Agreement New York Convention Convention on the Recognition and Enforcement of Foreign Arbitral Awards, New York, 1958 No. Number p. Page Para. Paragraph pp. Pages UNCITRAL United Nations Commission on International Trade Law UNCTAD United Nations Conference on Trade and Development v. Versus WIPO World Intellectual Property Organization v BIBLIOGRAPHY STATUTES AND TREATIES 1. Convention on the Recognition and Enforcement of Foreign Arbitral Awards, New York, 1958 2. UNCITRAL Model Law on International Commercial Arbitration 1985 with amendment adopted in 2006 3. Convention on The Settlement Of Investment Disputes Between States and Nationals of Other States RULES 1. European Council Regulation No. 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters 2. ICSID Rules of Procedures of Arbitration Proceedings, 2006 edition 3. UNCITRAL Arbitration Rules 1976 4. IBA Guidelines on Conflicts of Interest in International Arbitration 2004 CASE 1. Metalclad Corporation v. United Mexican States, ICSID Case No. ARB(AB)/97/1, (2000) SCHOLARY WORKS AND ARTICLE 1. Betty Southard Murphy, “ADR’s Impact on International Commerce”, Dispute Resolution Journal (1993) 2. Christian Burhing – Uhle, “A Survey on Arbitration and Settlement in International Business Disputes”, in Christopher R. Drahozal, Richard W. Naimark, Towards a science of international arbitration: collected empirical research, Kluwer Law International (2005) 3. Donald Carper, Bill West, John McKinsey, Understanding the Law, 5 th ed., Thompson Learning Inc., (2008) 4. Estela Kennen, Advantages and Disadvantages of ADR - Understanding Alternative Dispute Resolution (2008), available at http://www.suite101.com/content/advantages-and- disadvantages-of-adr-a58925 5. Garry B. Born, International Arbitration and Forum Selection Agreements: Drafting and Enforcing, Kluwer Law International (2010) 6. J.G. Merrills, International Dispute Settlement, Cambridge University Press (2005) vi 7. Julian D. M. Lew, Loukas A. Mistelis, Stefan Kröll, Comparative International Commercial Arbitration, Kluwer Law International (2003) 8. Lewis L. Maltby, “Private Justice: Employment Arbitration and Civil Rights”, Columbia Human Rights Law Review (1998) 9. M.I.M. Aboul Enein, International Commercial Arbitration, at Conference “Preventing and Managing International Commercial Disputes Towards a EuroMed Alternative Dispute Resolution Infrastructure”, Rome (2007) 10. Margaret L. Moses, The Principles and Practice of International Commercial Arbitration, Cambridge University Press (2008) 11. Nigel Blackaby, Constantine Partasides, Alan Redfern, Martin Hunter, Redfern and Hunter on International Arbitration, 5 th ed. Oxford University Press (2009) 12. Nigel Blackaby, Constantine Partasides, Alan Redfern, Martin Hunter, Law and Practice of International Commercial Arbitration, 3 rd ed., Kluwer Law International (2004) 13. Norton Rose Group, “Arbitration – a Guide to International Arbitration”, Arbitration Across the Regions, www.nortonrose.com, access on October 31 st , 2010, available at http://www.nortonrose.com/knowledge/publications/pdf/Arbitration%20manuals/file26050.p df 14. Paul Jacobs, “Arbitration and Mediation: A Viable Alternative to Court Proceedings?”, published in Stern Cohen, Chartered Accountants, Executive Summary (1995) 15. Peter Sherwin, Ana Vermal, Elizabeth Figueira, Proskauer on International Litigation and Arbitration: Managing, Resolving, and Avoiding Cross-Border Business or Regulatory Disputes, Proskauer (2010), available at http://www.proskauerguide.com/arbitration/19/I 16. Richard Smith, Tim Portwood and Michael d. Nolan, “Talking Point: International Arbitration”, Financial Worldwide (2010) 17. UNCITRAL, Report of the Secretary General: Possible Features of a Model Law on International Commercial Arbitration, A/CN.9/207 18. UNCITRAL, Report of the Working Group on International Contract Practices on the work of its third session, A/CN.9/216; 19. UNCTAD, 5.1 International Commercial Arbitration, United Nations, New York and Geneva (2005) 1 INTRODUCTION For settlement of international disputes, there are two types of means. The first one is diplomatic measures, including good office, negotiation, mediation, conciliation and inquiry in case of public international disputes; or conciliation, mediation, mini-trial, expert evaluation, dispute board, in case of private international disputes. The second one names legal means, including arbitration and judicial settlement, i.e., litigation. Those are all means to settle both public international disputes and private international disputes. In case of disputes with economic and commercial nature, their parties are reluctant to refer them to national court as they do not want the government to get involved. This is especially true in investment disputes where one party is nature person or judicial person and another is a state. Litigation at court brings many difficulties that businessmen never want to face. However, if they seek to diplomatic means, there is a bigger risk that their dispute may be impossible to be resolved, and finally they still have to resort to adjudication. As a result, the best choice for them is arbitration, which collects many collects many advantages of both litigation and diplomatic measures (II). Besides, arbitration also has its own advantages, and the most significant ones are always favored by businessmen (III). After all, it can be concluded that arbitration is a good choice for the disputes with economic and commercial nature. However, before doing that, it is necessary to consider the general concept of arbitration (I). 2 ARBITRATION – A GOOD CHOICE FOR DISPUTES WITH ECONOMIC AND COMMERCIAL NATURE I. DEFINITION OF ARBITRATION Means to settle dispute are divided into two groups: diplomatic and legal means. Arbitration is known as a legal means for dispute settlement 1 . It has become the most prevalent method using international commercial disputes 2 To ascertain what arbitration is, it is necessary known that there is not an exact definition of arbitration. “Arbitration” is rarely defined in national law and arbitration rules. Even New York Convention left the term undefined. The drafters of the Model Law said that defining the term is “unnecessary” 3 . However, it is believed that the true reason is “difficult to formulate” 4 . In a simply way, arbitration is known as a specially established mechanism for the final and binding determination of disputes, by independent arbitrators, in accordance with procedures, structures and substantive legal or non-legal standards chosen directly or indirectly by the parties 5 . Although there is no definition, arbitration is characterized by some typical elements. It is a dispute settlement mechanism producing a final and binding award, based on the consensus of the parties. Especially, in arbitration, parties can choose who will judge their dispute on their own and choose the appropriate procedure rules applied, and moreover, request to keep all information in confidentiality. 1 J.G. Merrills, International Dispute Settlement, Cambridge University Press (2005), p. 91 2 Betty Southard Murphy, “ADR’s Impact on International Commerce”, Dispute Resolution Journal (1993), p. 68 3 UNCITRAL, Report of the Working Group on International Contract Practices on the work of its third session, A/CN.9/216, paras. 15-18, 17; Report of the Secretary General: Possible Features of a Model Law on International Commercial Arbitration, A/CN.9/207, paras. 29-30. 4 UNCTAD, 5.1 International Commercial Arbitration, United Nations, New York and Geneva (2005), p. 4 5 Julian D. M. Lew, Loukas A. Mistelis, Stefan Kröll, Comparative International Commercial Arbitration, Kluwer Law International (2003), para. 1-1 3 II. ARBITRATION COLLECTS ADVATAGES OF THE OTHERS 1. THE EFFECTIVENESS OF THE COURT Different from diplomatic measures which produces non-binding decisions, parties employ legal means including arbitration and judicial means when what is wanted it a binding decision 6 . It means that Arbitral Tribunal must render a determination of rights and obligations of the parties, and such decision must be final and binding. A procedure that does not lead to a final and binding award is not arbitration 7 , and such award shall be refused to recognition and enforcement in national court, under New York Convention 8 . Diplomatic measures, such as negotiation, mediation, conciliation, and inquiry, aim to arrive at a negotiated settlement 9 . The parties employ such measures have to face a possibility that the all effort has failed and the dispute remains unresolved. Even a resolution is reached; there is no guarantee for it to be implemented. This means that they could invest the time and money in trying to resolve the dispute by all ways and still end up having to go to legal means 10 which guarantee a decision to be reached and enforceable at law. The guarantee of a decision is important especially for disputes with economic nature. Different from other kinds of dispute, they are always in need of a solution as soon as possible. Therefore, many commercial and investment disputes are entirely appropriate to be resolved by adjudication 11 . Like court, arbitration guarantees a final and binding resolution for the parties. For such advantage, parties to the dispute can make sure that their dispute will properly be resolved. 6 Supra note 1 7 Supra note 4 p. 8 8 New York Convention, article V(1)(e) 9 Nigel Blackaby, Constantine Partasides, Alan Redfern, Martin Hunter, Redfern and Hunter on International Arbitration, 5 th ed. Oxford University Press (2009), para. 1.75 10 Estela Kennen, Advantages and Disadvantages of ADR - Understanding Alternative Dispute Resolution (2008), available at http://www.suite101.com/content/advantages-and-disadvantages-of-adr-a58925 11 M.I.M. Aboul Enein, International Commercial Arbitration, at Conference “Preventing and Managing International Commercial Disputes Towards a EuroMed Alternative Dispute Resolution Infrastructure”, Rome (2007), p. 2 4 2. ADVANTAGES SHARED WITH DIPLOMATIC MEASURES Arbitration is also considered as an “alternative dispute resolution” or ADR together with the means of diplomatic measures 12 , refer to all kinds of dispute resolution methods other than litigation. Therefore, the latter share many their advantages to arbitration. In arbitration and other diplomatic measures, parties can keep their control on proceedings and adjust them more suitable than litigation. As a result, parties can gain many advantages that litigation can never bring 13 . This part will indicates some prominent advantages only. a. FLEXIBILITY AND ECONOMY In general, litigation at court is quite complicated and prolix. Even, courts in many jurisdictions have been overloaded. In there, parties have to wait for a long time to take their turn. Differently, Arbitration gives parties substantial autonomy and control over the process that will be used so resolve their dispute 14 . They are free to choose rules applied to proceedings, modify it or self-designate one by agreement at any time during the proceedings. Therefore, arbitration is deemed more flexible than court. Besides, to restrict cost and time consuming, parties can involve controlling the time limit for dispute resolution. In general, it takes about one or more a year, or takes longer if the dispute relates to investment. To evaluate, employment cases, for example, can be arbitrated in half to a third the amount of time that they otherwise would be litigated 15 . Some experts concern that arbitration is not in fact cost less money and time as in theory. Arbitration proceeding is easy to be delayed if one party does not perform his task, e.g., appointing arbitrator. And parties will have to pay more if they refer to an institutional arbitration. However, in my opinion, arbitration rules all anticipate and provide provisions to prevent or overcome these circumstances. It is not unrecognizable that arbitration helps save much time, this means save money. Hence, at any circumstance, resolving dispute by arbitration is much more economical than by court. 12 Margaret L. Moses, The Principles and Practice of International Commercial Arbitration, Cambridge University Press (2008), p. 13. This view is mainly adopted in the United States. 13 Supra note 11, p. 5 14 Supra note 12, p. 1 15 Lewis L. Maltby, “Private Justice: Employment Arbitration and Civil Rights”, Columbia Human Rights Law Review (1998) [...]... SIGNIFICANT ADVANTAGES OF ARBITRATION 1 A CHOICE OF NEUTRAL FORUM AND A NEUTRAL TRIBUNAL a NEUTRIALITY OF THE FORUM In domestic context, parties who are looking for a binding decision on a dispute will usually have an effective choice between a national court and national arbitration In an international context there is no such choice There is no international court to deal with international commercial disputes2 3... conclude, the Arbitral Tribunal appears more neutral and adjustable to be more appropriate for each kind of dispute Those advantages can hardly found in litigation at court 2 ENFORCEMENT OF ARBITRAL AWARD Another significant advantage of arbitration is its award is easily enforceable thank to New York Convention Different from judgments of court which is subject to appeal, arbitral award is final and binding... confident in arbitration proceedings b NEUTRAL AND APPROPRIATE TRIBUNAL One of the most significant characteristics and advantages as well of arbitration is the Arbitral Tribunal consists of the judges of parties’ own choice This is another way to make arbitration more neutral and appropriate Arbitral Tribunal constituted in accordance with parties’ agreement is very important Otherwise, the award rendered... Nigel Blackaby, Constantine Partasides, Alan Redfern, Martin Hunter, Law and Practice of International Commercial Arbitration, 3rd ed., Kluwer Law International (2004), para 1-51 24 M.I.M Aboul Enein, International Commercial Arbitration, at Conference “Preventing and Managing International Commercial Disputes Towards a EuroMed Alternative Dispute Resolution Infrastructure”, Rome (2007), p 2 25 Supra note... arbitration Thank to this, parties can keep a certain control over the arbitration proceedings and make it more efficient By choosing arbitrators on their own, parties are confident that arbitration will result in an award which is much more reasonable and equal For aforementioned reasons, arbitration is proved a suitable means for disputes with economic and commercial nature 9 ... (2010), available at http://www.proskauerguide.com /arbitration/ 19/I 39 Richard Smith, Tim Portwood and Michael d Nolan, “TalkingPoint: International Arbitration , Financial Worldwide (2010), p 3 40 Garry B Born, International Arbitration and Forum Selection Agreements: Drafting and Enforcing, Kluwer Law International (2010), pp 10, 11 41 Supra note 39 8 CONCLUSION In brief, arbitration apparently processes... Tribunal shall be set aside or refused reorganization and enforcement31 In most rules, if the tribunal is a sole arbitrator, parties may agree upon him, or recourse to an appointing authority to do so In case of a panel of three arbitrators, normally, each party will appoint one arbitrator, and the party appointed arbitrators will appoint their president 32 All arbitrators shall be impartial and independent... Group, Arbitration – a Guide to International Arbitration , Arbitration Across the Regions, www.nortonrose.com, acess on October 31st, 2010, p 3, available at http://www.nortonrose.com/knowledge/publications/pdf /Arbitration% 20manuals/file26050.pdf 19 Christian Burhing – Uhle, A Survey on Arbitration and Settlement in International Business Disputes , in Christopher R Drahozal, Richard W Naimark, Towards... treaties, the recognition of foreign judgments in many nations is subject to local law, which often makes it difficult or impossible to obtain effective enforcement40 For this reason, the enforcement of an international arbitral award is far easier and more certain than that of a foreign court judgment41 In brief, arbitration guarantees its parties to reach a final and binding award, which diplomatic... reputation is hurt As a result, this advantage becomes one of the most significant According to a survey, very few (7%) thought there was no advantage19 The ICSID Tribunal has recognized that one of the main reasons for recourse to arbitration is to avoid publicity20 This kind of advantages can only be found in diplomatic measures and arbitration Besides, there are many other advantages that diplomatic