Literature review
Introduction to arbitration
International commercial arbitration is a method of solving disputes between international commercial institutions, as a result of disagreements arising between them during business interactions. It is a method that has been very much used in the recent past as a way to solve disputes easily since it does not follow formal agreements stipulated in legislative systems of the involved parties. These legal formalities are usually long, and the parties involved are mostly from different countries, with different legal backgrounds as well as cultural backgrounds, therefore, coming up with solutions normally becomes a very expensive and time consuming. This system of dispute resolution involves the development of a contract between the parties involved.
Arbitrators are usually used and are supposed to be third party chosen by the parties themselves or chosen on their behalf. Their work is to oversee that agreeable terms are made and that both parties abide as stipulated in the contract. They act as the judges and make sure that decisions made as well as the contract is sustainable so as to meet needs of the future such as resolution of future disputes the best way possible. National courts play a very major role in the arbitration process. Even though, arbitration tries to avoid involvement with national courts it very much needs it, and this creates a big paradoxical situation since they avoid them but still needs them, in certain situations.
Reason for avoiding courts
Arbitration process pretty much likes to be a voluntary process, away from courts’ influences in order to find their own justice and this is clear because two disputing parties come together and try to solve their problem voluntarily. However, the main aim of the courts and overall objective is to find justice and make sure it is severed. Therefore, the arbitration process and the court systems need each other; however, courts should leave behind the notions that they are superior and act as partners in the process. It is true that arbitration needs the courts because they help make sure that agreements made during arbitration take effect, they should therefore be kept on the sideline close to the whole process. They should see to it that they support the process as much as possible the process in which the parties have chosen. The court should respect the legal formalities chosen by the parties and should only intervene with minimal interference when the methods used by the parties are not justifiable.
Many courts in the world have been given jurisdiction by their respective governments to oversee the supervision of the arbitration process. One of the major aspects that are seen exercised by them is the ability of the party in the losing side to challenge the decision made by the arbitrator, and this may be through a review by the judiciary, however, over the years the role of the court has been declining to supporting rather than replacing the process that was a previous case. Various landmarks are there that show how the relationship between the national courts and the international arbitration process has evolved. The most notable and influential is the Model law especially the UK arbitration law of 1996. This law helped increase the arbitration tribunal’s powers while at the same time reduce courts’ involvements in their activities and processes and this went along and became the modern approach to international commercial arbitration. Courts are advised to be slow in finding reasons to get jurisdictions into arbitration but should always be there incised they are needed. And for the arbitration process, legislative matters involving courts should be avoided as much as possible and this would see that a healthy relationship develops between the courts and the arbitration.
International commercial arbitrations carry out their dispute resolutions in an autonomous manner but for legitimacy purposes they have to interact with national courts for help, support, as well as process effectiveness. For the above reasons, courts are only necessary during the process for support, enforcement and recognition and nothing else. So anything added during the interactions of courts and arbitration is found to be wrong and since this form of arbitration is of international terms most national courts of different countries end up interfering with the process because they see it as a way of protecting and helping out their nationals. Doing this is very illegitimate and against the New York conventions that keenly and clearly points out the requirements of court involvements in the process. Another thing to note is that arbitration specifies the courts that it involves itself with and they include the ones presiding over the arbitration including the arbitral tribunal and the one mandated with enforcement, therefore, other courts interventions create conflicts within set rule in the international scene as far as the process is concerned. The courts are only allowed involvement only in cases where and when the law states.
Importance of courts to arbitration
An instance of courts involvement includes during the appointing of the tribunal where it only assists in case the mechanism for appointing fails. These instances appear when the arbitrators do not carry out their duties well enough, or their independence is questionable. Courts also get involved during the review of jurisdictional matters of the tribunals as far as the general agreement of the arbitration is concerned. Thirdly, they may challenge awarding process in case any form of irregularity during the process and these instances are as stipulated in the model law as well as articles in the New York convention on international commercial arbitration.
Moreover, the courts can get involved in stages that include: firstly before a tribunal has been established. During this time, parties or a party may try to protect itself from the arbitration agreement when it seeks the courts help as a way of trying to challenge the validity of the agreement and process and is usually an urgent process where the party tries to seek help from the courts before the tribunal is formed. However in accordance with the New York convention, it is the duty of the court to support the parties to go through the arbitration process. The court then tries to review the validity of the agreement of the arbitration and bridges the gap before the tribunal is formed, and this has been seen to be a very beneficial move and highly advocated in order to protect the arbitration proceedings before it commences. Secondly, courts also get a chance to intervene when the arbitration process is beginning. During this time, they help in the appointing of arbitrators as well helping them in case of challenges before they have gotten used to the process. It helps in the establishment of a tribunal in case the mechanism established for appointing the tribunal by the parties does not take effect as required or the process is impossible in the case of further disputes and disagreements. Thirdly, court involvement occurs during the process itself as it progresses and it happens when the arbitrators are unable to enforce procedures and processes and so the courts come in and assists as a way to protect the process. The courts assume the position of arbitrators and make sure the process proceeds.
Finally, courts get themselves involved during the process of enforcement and awarding where a party is dissatisfied by the awarding and enforcement. Here, a party may challenge the enforcement process which will involve the court. The matter will be set aside from the arbitration’s power. However, in this case the court will come in according to its own procedures and laws which will be contrary to the agreement by the arbitration process. It would be a very tricky situation and should be looked at keenly since the court might bring in its cultural, political and legal influences in the process and go against the agreement of the process itself.
Court intervention through injunctions
There is also another way of court involvement in the arbitration process and this is during the process of giving injunctions, and this gives the process great difficulties as it is possible in all stages of the process. Injunctions are simply court orders that parties seek to stop or rather refrain the other party from commencing on a certain thing mostly enforcement and awarding. It has been described as the biggest problem facing international commercial arbitration. These injunctions are mainly of two types: the ones that halt the process from commencing called anti arbitration injunctions and those that promote or rather encourage the commencing of enforcement of the arbitration process called anti-suit injunctions.
Anti arbitration injunction
For the anti arbitration, injunctions occur with the aim of preventing the establishment of the tribunal and in this case, it happens before the process begins, or afterwards as the process is progressing. It helps to stop the process when its validity is being questioned. For this injunction to be executed, it should be very clear that, in fact the process is questionable. However, intervention of this forms depends on the nature of legislative structure of the country whether civil law of common law. For civil law, it is very reluctant for courts to intervene while for the common laws they can easily intervene in the process. However, this form of intervention should be in accordance with the Model law where the courts only intervene only as provided by the law and the arbitration agreement itself.
Anti-suit injunction
The anti suit injunctions, on the other hand are court involvements aimed at the courts when they try to go against the arbitrations proceedings and agreements. It is usually directed to the individual who tries to use the courts against the process of arbitration. This form of injunction is very crucial as it clearly shows the role that the national courts play as a supervisory body on the process. Another thing to note and be clear about is that the anti-suit injunctions vary from country to country with each having its own way of handling this situations depending on their own laws. Also, the injunctions always vary from one another as far as context is concerned and is because of the arbitration’s nature at the moment. However, national courts only use these injunctions as a way to protect the process of arbitration and its agreements. Moreover, they are issued with the aim of trying to correct or sometimes change the conduct that is wrong within the process.
The court’s main concern or rather agenda is to try and to make it hard for a party to continue with the process even if there have been obstacles in the process. However, the courts should not intervene further than what is in their jurisdiction as proposed in the agreement. These injunctions only affect the process because it is how the parties decided to handle its matters in terms of resolving disputes in case they go out of hand and therefore courts should not add any other issues to the process.
Arbitration awards
For arbitration process, the main goal is to get resolutions after parties have sat together to join efforts. These goals are usually expected in the form of arbitration awards from the arbitration tribunal. It is more or less like a court ruling or rather judgment that is made after the process is complete. In the arbitration, parties go to seek help mainly because of damages against them by other parties and arbitration awards are a form of remedies to these damages. They are in the form of various categories depending on the context of the arbitration and the type of damages incurred. They include: conventional damages where the arbitration tribunal orders a party to pay money to the other party as a way to pay for damages. The award may also be in the form of a declaration made by the tribunal which should be adhered to strictly, by the parties involved. The tribunal also has jurisdictions the same as the ones by the courts such as ordering a party or the parties to perform specific tasks, order a party or the parties to stop a particular activity and may also order a party to rectify certain documents that may affect the other party.
Enforcement of awards
With these actions, the tribunal can execute its mandated obligations and be able to enforce the awards effectively and fairly. The main aim of this enforcement is to facilitate resolution of disputes between the parties involved. As far as international commercial arbitration is concerned, it is far much easier to use an arbitration process than to follow courts and wait for it to enforce judgements since here; it may involve different countries, with different legal backgrounds and cultures. For the purpose of enforcing arbitration, it should be clear on how it is international in nature, and, therefore, know that they have been guided by the New York convention on arbitration. Most countries are part of the convention, and they find it far easier to enforce using arbitration rather than by the courts. Another important factor to note about the international commercial arbitration is that it is not limited in terms of awards. Unlike courts and other agreements which are only limited to monetary awards, arbitration is not tied down and can enforce many other forms of awards as mentioned earlier.
Conclusion
This literature review goes through information about the interactions between the processes of arbitration more specifically the international commercial arbitration and shows in what ways do courts and the processes interact. It also explains why parties use these processes of dispute resolution as opposed to use of courts. They include the fact that most of them are international in nature involving different countries and therefore they have different legal backgrounds in terms of their national courts and legal systems. The institutions seek arbitration because is a faster, less complicated and most of all cheap way of solving problems. The process also has more jurisdictions in terms of enforcement of awards and is, therefore, not limited to covering monetary damages only. Because of these reason, most commercial interactions rely on arbitration. However, staying on the sideline, supervising the process is seen to be a very important aspect of the court. They come to the rescue when certain aspects in the process become unclear. However, they only intervene depending on how they have been mandated by the agreement itself, therefore they only come as helpers.
This research is very important as it will find out more about how important the relationship between courts and international commercial arbitration process is. It will try to see how the process may progress in case there is no interaction with courts. It will therefore try to answer the following research questions:
What are the main reasons why parties seek for arbitration rather that use the courts?
What are the various ways in which the courts involve itself in the process?
What would be the overall effect of not including courts completely in the arbitration?
Bibliographies
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Fentiman, R. (2009). Arbitration And Antisuit Injunctions In Europe. The Cambridge Law Journal , 68(02), 278.
Fentiman, R. (2013). Antisuit Injunctions And Arbitration Agreements. The Cambridge Law Journal , 72(03), 521-525.
Gaillard, E., Pietro, D., & Knobil, N. (2008). Enforcement of arbitration agreements and international arbitral awards: the New York Convention in practice. London: Cameron May.
Haljan, D. (2013). Separating powers international law before national courts. The Hague: T. M. C. Asser Press.
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Mosimann, O. L. (2010). International Commerce and Arbitration Anti-Suit Injunctions in International Commercial Arbitration.. The Hague: Eleven International Publishing.
Mosimann, O. L. (2010). Anti-suit injunctions in international commercial arbitration. The Hague, The Netherlands: Eleven International Pub..
Redfern, A. (2004). Law and practice of international commercial arbitration (4th ed.). London: Sweet & Maxwell.
(2006). UNCITRAL Decision regarding the Adoption of the Revised articles of the UNCITRAL Model Law on International Commercial Arbitration, and of a Recommendation regarding the interpretation of article II, paragraph 2, and article VII, paragraph 1, of the Conve. Uniform Law Review - Revue de droit uniforme, 11(4), 866-883.
Voigt, S., & Park, S. (2013). Arbitration is No Substitute for State Courts. Journal of Development Studies, 49(11), 1514-1531.
