International Business Disputes PDF

Ways to solve international business disputes -national courts (litigation): private international law issue: the court of which country is competent? EU Brussels I Regulation -arbitration: international commercial arbitration...

Ways to solve international business disputes -national courts (litigation): private international law issue: the court of which country is competent? EU Brussels I Regulation -arbitration: international commercial arbitration (two private parties are involved) investment arbitration (one private party VS a state -it concerns violations of IIL-) Key features of arbitration (in general) -method of dispute resolution alternative to courts/public adjudication→ private justice form -parties to a dispute give the power to decide the dispute to a neutral third subject, that is the arbitrator or the arbitral tribunal (it is not a judge, only national courts have one) -the outcome is called award -lodo-, not judgement Key features of the arbitral award (in general) - nal no appeal→ nal determination of the dispute, no multiple layers can only be set aside (annulled) by national court for limited reasons, not an appeal anyway it has nothing to do with whether or not the decision is correct, therefore even if the law was not applied correctly, and the decision is wrong, that cannot be changed because that would be an appeal -binding legal obligation to respect the award if parties do not comply, award can be enforced (treated by national courts as if it were a judgement) International Commercial Arbitration Ad hoc arbitration (=for one speci c case) -simplest form of arbitration but no one actually ensures parties respect the procedure -parties choose the arbitrator(s), venue, procedural rules from scratch -parties often choose the UNCITRAL arbitration rules as procedural rules, safer and easier Administered arbitration -the basics are still the same (= arbitral tribunal is created for one dispute only) -arbitration is administered by an arbitral institution (private entity) e.g. International Chamber of Commerce; Stockholm Chamber of Commerce; London Court of International Arbitration -function of arbitral institutions is to supervise arbitration (they are not courts, therefore there are no xed judges deciding multiple disputes) -each arbitral institution has its own rules of procedure, but parties may choose other rules Advantages -independence and secrecy -competence of arbitrators -cost and time ef cient -possibility to choose procedural rules -con dentiality -easy enforcement (according to the New York Convention -treaty-) Disadvantages (potentially) -lack of transparency compared to public adjudication - nality: wrong decisions cannot be corrected (fast > right decision) -costs (arbitrators, experts, institutions) may be greater than litigation -limitations on powers of arbitral tribunals (≠national courts can rely on state authorities to force parties to comply with an order) fi fi fi fi fi fi fi   Arbitration agreement (core) -it is always based on consent by both parties -consent is given through a contract either by (different ways to express the consent) arbitration clause: an article of the contract arbitration agreement: a separate contract whose only purpose is to have arbitration it can be done after the dispute arose but it could be more dif cult to agree -despite the agreement, if one party does not want to solve the dispute through arbitration, it would go before some national court before the other party starts arbitration but there exists a legal tool to enforce the arbitration agreement and to prevent this situation from happening Enforcement of the Arbitration Agreement (a way to give effect and execute it) -ensured under the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (most successful treaty of private international law) -more than 170 states parties → regardless of where it was made, an award can be enforced in more than 170 states , it doesn’t exists something similar for judgement -national courts obliged to give effect to arbitration agreements *Art.2(1): “each contracting state shall recognize an agreement in writing under which the parties undertake to submit to arbitration all or any differences which have arisen or which may arise between them in respect of a de ned legal relationship, whether contractual or not, concerning a subject matter capable of settlement by arbitration” *Art.2(3): “The court of a contracting state, when seized of an action in a matter in respect of which the parties have made an agreement within the meaning of this article, shall, at the request of one of the parties, refer the parties to arbitration, unless it nds that the said agreement is null and void, inoperative or incapable of being performed” -consequence- Validity of the Arbitration Agreement (requirements) [mostly uniform substantive rule -double function of Art.2 it is primarily concerned with enforcement of arbitration agreements it also gives indications on validity or arbitration agreements→ “when it is null and void, inoperative or incapable of being performed (3)” -an agreement in writing: no oral arbitration clause -a de ned legal relationship: no generic arbitration clause (e.g. relating to any future dispute between the parties -unde ned-) -a subject matter capable of settlement by arbitration: certain subjects cannot be arbitrated *Art.5 (1-a): “enforcement of the award may be refused if] the parties to the agreement referred to in Article II were, under the law applicable to them, under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made” -some incapacity: parties must be capable to conclude contracts under the law applicable to them (e.g. a child or non actual representatives of a company cannot) -said agreement is not valid under the law to which the parties have subjected it: validity depends also on the law chosen by the parties [reference to national law Enforcement of the Arbitral Award (main topic of the Convention) -it means to force the losing party to comply through legal means -it must be performed through national courts (arbitral tribunals don’t have coercive power) -it is greatly facilitated by the 1958 New York Convention (pro enforcement = presumption) -steps (procedural rules de ned by national law -e.g. fees, formalities, competent courts): lawyers have to locate assets of the other party to nd out in which state they keep their money (usually where the company has its main legal seat) to go to the national courts of the state where the assets are and ask to proceed judges either give money or sell the assets at an auction and then give the money fi fi fi fi fi fi fi  *Art.3: “each contracting atate shall recognize arbitral awards as binding and enforce them in accordance with the rules of procedure of the territory where the award is relied upon, under the conditions laid down in the following articles. there shall not be imposed substantially more onerous conditions or higher fees or charges on the recognition or enforcement of arbitral awards to which this convention applies than are imposed on the recognition or enforcement of domestic arbitral awards” obligation to execute may be rendered in any country within the New York Conv. -Art.5 de nes the cases where enforcement and recognition of the award may be refused by a national court, these exceptions must be demonstrated by the losing party (1) *Art 5 (1-a): “the parties to the agreement referred to in article II were, under the law applicable to them, under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made” the arbitration agreement is invalid meaning it’s concluded with some incapacity *Art 5 (1-b): “the party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case” the losing party did not know that the arbitration was going on (e.g. domicile issues) or the losing party could not provide evidence or could not be heard *Art 5 (1-c): “the award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be recognized and enforced” the arbitral tribunal, decided to deal with stuff that was not in the arbitration clause *Art 5 (1-d): “the composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place” the number of arbitrators is wrong or the way to select them is not the one chosen *Art 5 (1-e): “the award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made” the arbitration should have never taken place and there is no award *Art 5 (2-a): “the subject matter of the difference is not capable of settlement by arbitration under the law of that country” *Art 5 (2-b): “the recognition or enforcement of the award would be contrary to the public policy of that country” fi