What is arbitration ?
Arbitration is the most adequate and efficient dispute resolution mechanism for international commercial disputes.
Arbitration allows the resolution of a contractual dispute by an independent and impartial arbitral tribunal, appointed once a dispute has arisen specifically to decide this dispute by issuing a final, binding and enforceable decision called an “arbitral award”. Arbitral tribunals are normally composed of one or three arbitrators.
Arbitration is a contractual dispute resolution method, meaning that it is not imposed on the parties to the dispute by the law. Arbitration is only available if the parties to the dispute have consented to having their disputes resolved by arbitration, most frequently at the time of conclusion of the contract in dispute, or subsequently, once a specific dispute has arisen.
Example of an arbitration clause which may be found in a commercial contract: “All disputes arising out of or in relation to this agreement shall be finally settled by arbitration in accordance with the ICC Rules of arbitration.”
Arbitral procedure is flexible and inspired from both civil and common law procedure. Due process rights are guaranteed and all parties have a fair and equal opportunity to present their case.
Arbitral awards may be recognised and enforced internationally in all State parties to the 1958 UNCITRAL Convention on the Recognition and Enforcement of Foreign Arbitral Awards (also known as the New York Convention). Currently, there are over 150 State parties to this convention. To know more about the New York Convention, visit www.newyorkconvention1958.org
Arbitral awards are normally not subject to any appeal, which saves the parties the time and cost of a whole new proceedings after a first instance decision is rendered. This is a significant advantage as compared with court litigation, where the losing party will almost invariably appeal the first instance decision in the hope of obtaining a better result in appeal, thereby forcing the winning party into a second fully-fledged court proceeding.
Arbitration is adequate for all types of dispute (large or small), provided the right arbitral tribunal is appointed for each case, and competent counsel is involved.
Arbitration is only as good as the arbitrators and counsel involved
It is vital to ensure that the right arbitrator(s) is/are appointed to ensure that the arbitral procedure meets the parties’ expectations and that the award is satisfactory. In most cases, the parties to the dispute (usually advised and represented by counsel) will have the opportunity to participate in the constitution of the arbitral tribunal. Involving arbitration-specialised counsel from the beginning of the case is therefore crucially important.
Choosing the right counsel is also crucial to ensuring that arbitral proceedings proceed smoothly and that a party’s case is adequately presented, to optimise chances of success.
Inexperienced counsel may make inappropriate choices during the constitution of the arbitral tribunal or the initial stages of the proceedings, with catastrophic consequences on their clients’ chances of success. They may fail to avail themselves of all procedural opportunities available, due to their lack of experience in arbitration (for example, many lawyers from civil law jurisdictions lack experience in the presentation of witness evidence, and do not master cross-examination techniques) or knowledge of a wide pool of arbitrators. More often than not, inexperienced counsel do not know enough arbitrators to make adequate proposals to their clients during the constitution of the arbitral tribunal and/or are not able to assess whether a prospective arbitrator has the right skills/mindset for the case at hand, notably how he/she will interact with the other arbitrator(s) already appointed during deliberations.
Using specialised counsel is cost-effective
An arbitration-specialised counsel will be able to advise on the constitution of the Tribunal and on all aspects of the arbitral procedure and avoid the pittfalls that lawyers not specialised in arbitration may fall into. In particular, the initial stages of the proceedings are crucial and require specialist advice to avoid mistakes that may not be corrected later. If deemed appropriate, your arbitration lawyer may work alongside your usual counsel to add value to the dispute resolution process and ensure the best possible result. Properly managed, such collaboration can be very efficient, prudent and even cost-effective.