Definition:

Alternative dispute resolution (“ADR”) refers to any method of  resolving

disputes without litigation. ADR regroups all processes and techniques of
conflict resolution that occur outside of any governmental authority. The
most famous ADR methods are the
following: mediation, arbitration, conciliation, negotiation,
and transaction. 

All ADR methods have common characteristics – i.e., enabling the

parties to find admissible solutions to their conflicts outside of traditional
legal / court proceedings, but are governed by different rules. For
instance, in negotiation there is no third party who intervenes to help the
parties reach an agreement, unlike in mediation and conciliation, where
the purpose of the third party is to promote an amicable agreement
between the parties. In arbitration, the third party (an arbitrator or
several arbitrators) will play an important role as it will render
an arbitration award that will be binding on the parties. In comparison, in
conciliation and mediation, the third party does not impose any binding
decision.

If all the ADR methods are different, they should not be compared and
confronted because in practice, the parties combine the use of these
different ADRs. For instance, the parties may stipulate in their contracts
that in the event of a dispute they will first submit to an attempt at
amicable settlement (conciliation/mediation) and only in the event of
failure will they resort to a judicial method of settlement, which may be
arbitration or recourse to the State justice system. ADRs therefore come
into play at different levels and have a complementary character.

The main advantages of ADR are rapidity, confidentiality and flexibility.

Public courts may be asked to review the validity of ADR methods, but

they will rarely overturn ADR decisions and awards if the disputing parties
formed a valid contract to abide by them.
Overview

Alternative Dispute Resolution ("ADR") refers to any means of settling

disputes outside of the courtroom. ADR typically includes early neutral
evaluation, negotiation, conciliation, mediation, and arbitration. As
burgeoning court queues, rising costs of litigation, and time delays
continue to plague litigants, more states have begun experimenting with
ADR programs. Some of these programs are voluntary; others are
mandatory.

 Negotiation

Negotiation is the preeminent mode of dispute resolution. While the two

most known forms of ADR are arbitration and mediation, negotiation is
almost always attempted first to resolve a dispute. Negotiation allows the
parties to meet in order to settle a dispute. The main advantage of this
form of dispute settlement is that it allows the parties themselves to
control the process and the solution. Negotiation is much less formal than
other types of ADRs and allows for a lot of flexibility.

 Mediation

Mediation is also an informal alternative to litigation. Mediators are

individuals trained in negotiations, who bring opposing parties together
and attempt to work out a settlement or agreement that both parties
accept or reject. Mediation is not binding. Mediation is used for a wide
gamut of case-types ranging from juvenile felonies to federal government
negotiations with Native American Indian tribes. Mediation has also
become a significant method for resolving disputes between investors and
their stock brokers. See Securities Dispute Resolution.

 Arbitration

Arbitration is one of the most emblematic and growing forms of ADR.

Arbitration is more formal than mediation and has a lot of similarities with
traditional court proceedings, involving limited discovery and
simplified rules of evidence (ex. hearsay is usually admissible in
arbitration).

Arbitration Compared with National Courts National courts have, or are at

least perceived to have, an inherent national prejudice. Judges are drawn
from that nationality. They do not necessarily have the knowledge of, or
ability to handle, disputes arising from international business transactions
or even disputes between parties from different countries, i.e. with
conflicting legal, cultural, political and ethical systems. The procedure
followed in national courts is in accordance with the laws set down by that
state. National courts are generally open to the public; any one can enter
to watch and listen to the proceedings. A principal factor differentiating a
national court from an arbitration tribunal is the rigidity of national court
procedures. Whichever court one goes to, inevitably, there are civil
procedural rules or codes or precedent as to the way in which cases are
conducted. The procedural rules or code lay down the basis for the courts'
jurisdiction, the circumstances in which an action can be brought, which
particular national court has jurisdiction over a particular type of dispute,
how to initiate proceedings, what documents must be filed, the rights of
reply and how the case, generally, should be conducted. There are little or
no areas on which the judge can, in his discretion, even with the
agreement of the parties, move away from the strictures of the civil
procedure rules or code.

By contrast, the form, structure and procedure of every arbitration is

different and will vary according to the characteristics of the case. The
arbitrations may be under different rules, with different national or
international laws applying, with one or three arbitrators and one or more
claimants or respondents. In international arbitration, even the variants of
the position of the arbitration tribunal can affect and influence how the
arbitration will proceed. It is for these reasons that for many types of
international commercial arrangements, arbitration is the preferred
mechanism for dispute resolution.

A. Flexible procedure: With parties of different origins and from

different parts of the world, with arbitrations being conducted under
different legal systems and arbitration rules, with arbitrators coming from
various jurisdictions, there can be no rigid arbitration procedure. A special
procedure is needed for each arbitration. Due to the private nature of
arbitration and that it is established by agreement of the parties, the
procedure can be fixed by the parties and arbitrators to meet the
characteristics of each case. All of the major international arbitration rules
give authority and power to the arbitrators to determine the procedure
that they consider appropriate, subject always to party autonomy. For
example, Article 19 of ICC 2012 Rules provides The proceedings before
the Arbitral Tribunal shall be governed by these Rules, and, where these
Rules are silent, by any rules which the parties or, failing them, the
Arbitral Tribunal may settle on, whether or not reference is thereby made
to the rules of procedure of a national law to be applied to the arbitration.
National laws contain similar provisions. Section 34(1) English Arbitration
Act 1996 provides that it is … for the tribunal to decide all procedural and
evidential matters, subject to the right of the parties to agree any matter.

B. Suitability for international transactions: Contracting parties from

one country are generally unwilling to submit to the national courts of the
other party or to any national courts. Justifiable or not, there is often a
distrust of foreign courts, as well as a question as to their suitability for
certain types of international contracts. The neutrality and independence
of the arbitration process, established within the context of a neutral
venue, and not belonging to any national system, is a real attraction for
the parties for international arbitration as a system to resolve disputes
arising from international transactions. As parties are drawn from
jurisdictions across the world, with very different legal, political, cultural
and ethical systems, arbitration provides a forum in which all of these
interests can be protected and respected, whilst determining the most
appropriate way to resolve the dispute between the parties.

C. Final and binding: Generally the decisions of arbitrators are to be

final and binding. There are no or very limited grounds on which
arbitrators' awards can be appealed to the courts on the basis that the
arbitrators' conclusions are wrong. Equally, the grounds upon which the
decisions of arbitrators can be challenged and set aside are limited to
where the arbitrators have either exceeded the jurisdictional authority in
the arbitration agreement or have committed some serious breach of
natural justice.

D. Easy enforcement: Both domestic and international arbitration

awards should be easily enforceable. In many countries, a domestic
award can be enforced in the same way and as simply as a national court
judgment. There is no review of the decision of the arbitrators and how
they reached that conclusion. The legal system recognises that the parties
have decided that arbitrators should make the final determination of their
dispute as an alternative to the national court. The law therefore gives
effect to the intention of the parties and enforces the award just as it
would a national judgment. In the international arena arbitration awards
are more easily enforceable than national court judgments. As a result of
the New York Convention there are now more than 130 countries which
have accepted the obligation to give effect to arbitration awards made in
other countries which are party to the New York Convention. There are
limited grounds to refuse enforcement. This is far more effective than the
enforcement of foreign judgments which are dependent on bilateral
conventions (with limited exceptions, for example, within Europe where
EC Regulation 44/2001 and the Brussels and Lugano Conventions apply).

E. Neutrality: By contrast to the perceived partiality of a national court,

an arbitration tribunal is thought to be neutral. It can be established with
its seat in a country with which neither party has any connection;
arbitrators can be selected from different countries and with different
nationalities, and the tribunal is independent of direct national influence.
This neutrality gives arbitration an independence and a loyalty primarily
to the parties. The neutrality also enables the tribunal to function in a
nonnational way reflecting the need for international developments. This
is also of particular importance where parties from different parts of the
world would like to have an arbitrator on the tribunal who understands
their background and thinking, and the circumstances and situations from
which they come. It is often possible to balance a tribunal by selecting
arbitrators with different skills and knowledge as well as experience and
background.

F. Expert arbitrators: Particularly for disputes that arise out of

specialist industries or where there is a particular characteristic of the
dispute, parties are able to select arbitrators with expert knowledge.
Whilst, generally, arbitrators are not expected to use their relevant
background experience for the purpose of making decisions (that is a
function for an expert determination), having specific knowledge and an
understanding of the subject-matter will often give increased confidence
in the arbitration process.

G. Confidentiality: Due to the private nature of arbitration, many

consider that arbitration is also a confidential process. As a result, what
proceeds in the arbitration will not only be kept private between the
parties but will remain absolutely confidential. This means that the
existence of the arbitration, the subject matter, the evidence, the
documents that are prepared for and exchanged in the arbitration, and
the arbitrators' awards cannot be divulged to third parties. It also means
that only parties to the arbitration, their legal representatives and those
who are specifically authorised by each party, can attend the arbitration
hearing. Each of those individuals are considered to be subject to the duty
of confidentiality on behalf of the party they are representing. Whilst the
legal effectiveness of this - 38 - confidentiality is in dispute, it is clearly a
concept that many consider to be a fundamental and important advantage
to arbitration.

H. Expedition: It is often assumed that arbitration is, or at least should

be, quicker than national courts. In theory and in many cases this is so.
Due to party autonomy, the fact that arbitrators can be selected, and as
each case stands on its own, there is no backlog of cases. In many
countries, the national courts have such a long backlog that it can be
years before a hearing date can be obtained. If the parties are agreed,
they can seek the involvement of an arbitrator at very short notice; if
they are able to present their cases to the arbitrator within a short period,
the whole matter can be resolved with great expedition. However, in
reality, major complicated international arbitrations frequently continue
for lengthy periods. Nonetheless, in most such cases, they are still
resolved more quickly than in national courts. Under the English
Arbitration Act 1996 there is an obligation on arbitrators to ensure that
there is no unnecessary delay in the conduct of the arbitration.

I. Cost: Due to the inherent advantages discussed above, in principle

arbitration should be less expensive than national courts. Again, in
theory, this may be the case, but in practice it is not always so. Where
arbitrations can be held quickly and the awards issued with little or no
delay, the costs may be significantly reduced in contrast to those of a
lengthy court procedure. However, for complicated international
arbitrations, particularly before three arbitrators, this may not always be
the case as in addition to the costs of the lawyers, the parties will also
have to pay the significant fees of the arbitrators.

GENEVA TO NEWYORK CONVENTION:

Early Efforts to Support International Arbitration As world trade

expanded, the need to create a mechanism for international recognition
and enforcement of both arbitration agreements and awards in relation to
international commercial agreements was of paramount importance. To
facilitate arbitration, two Hague Conventions were concluded in 1899 and
in 1907, both entitled The Hague Convention for the Pacific Settlement of
International Disputes. These Conventions created the Permanent Court
of Arbitration which still exists and functions today. The world's business
community established the International Chamber of Commerce (ICC) in
1919. This institution has been and remains the voice of the international
business community. In 1923 the ICC created its Court of International
Arbitration to provide the framework for an independent and neutral
arbitration system for the determination of commercial disputes between
parties from different countries. Since the early 1920s the ICC has been a
major driving force in the promotion of both arbitration as a mechanism
for the resolution of international commercial disputes and the need for
international regulations to uphold and support the arbitration process.

1.1.5.2 The Geneva Conventions 1923 and 1927 The ICC was directly
involved in the promotion and adoption of the 1923 Geneva Protocol on
Arbitration Clauses and the 1927 Geneva Convention on the Execution of
Foreign Awards. These instruments were collectively aimed at
international recognition of arbitration agreements and awards. In those
days, the mechanisms brought by those instruments were considered
successful, but their operation was not problem-free. The main problem
was the recognition of awards and is known as the problem of double
exequatur. For a foreign award to be enforced in the national jurisdiction,
it was generally necessary to demonstrate that the award had become
final in the country where it was rendered. This often required some form
of confirmatory order or permission from the court in the country where
the award was rendered. Often such court would review the award and a
losing party would use the opportunity to challenge the arbitration
tribunal's findings or conclusions in the award, and the procedure
according to which the arbitration was conducted. Furthermore, the
successful party had the burden of proof in the country where it was
seeking enforcement, that the conditions for enforcement set out in the
1927 Convention were satisfied. In addition, the enforcing party had to
show that the constitution of a tribunal and the arbitration process had
conformed with the law of the place of arbitration.

The New York Convention The major catalyst for the development of an
international arbitration regime was the adoption of the New York
Convention on the Recognition and Enforcement of Foreign Arbitral
Awards 1958. As will be seen throughout this book the New York
Convention continues to set the standard requirements for a successful
international arbitration process. With the expansion of international trade
after World War II the ICC took the initiative to develop a new convention
that would obviate the problems and could replace the Geneva
Conventions. In 1953, the ICC prepared a draft convention entitled
Enforcement of International Arbitral - Awards - Report and Preliminary
Draft Convention.The aim was to “greatly increase the efficiency of
international commercial arbitration, by ensuring a rapid enforcement of
arbitration awards rendered in accordance with the will of the parties.”In
the eyes of the promoters of the Preliminary Draft, international
enforcement of arbitration awards could only be attained “by giving full
value to the autonomy of the [parties'] will.…” This effectively proposed
arbitration not governed by a national law. The idea, however, did not
attract enough international support. The United Nations, through its
Economic and Social Council (ECOSOC), took the lead in the review of the
ICC draft convention. It then prepared its own draft convention in terms
closer to the Geneva Convention than the ICC draft. The ECOSOC draft
together with the ICC draft were considered at a conference in New York
in 1958. A compromise text was adopted as the New York Convention.
The Convention provides for international recognition of arbitration
agreements and awards by national courts. The New York Convention
replaced the two Geneva Conventions although there remain countries
party to those Conventions. More significantly, today and for the past 30
years, the New York Convention is the cornerstone of international
commercial arbitration. The Convention established an international
regime to be adopted in national laws which facilitates the recognition and
enforcement of both arbitration agreements and awards. The success of
the Convention is well illustrated by three factors; First, over 130
countries are party to the Convention. There are few private law
conventions that have achieved such a wide international acceptance.
Secondly, for the purpose of interpreting and applying the New York
Convention, it is now common for the courts of one country to look to the
decisions of other foreign national courts to see how specific provisions
have been interpreted and applied. Whilst these national court decisions
are not automatically binding, such applications of the common rules of
the New York Convention have had a direct influence on the development
of international arbitration practice and law, which is - 49 - increasingly of
significant influence on parties, arbitrators, and national courts,
regardless of nationality. Thirdly, and this follows from the above two
points, it is now generally accepted that agreements to arbitrate and
arbitration awards will be enforced by the courts of most countries which
are party to the New York Convention. Upholding arbitration agreements
and awards is an absolute prerequisite if international arbitration is to
succeed and the New York Convention has provided the framework for
this success.

Other Arbitration Conventions The New York Convention was followed by

a series of bilateral and multilateral Conventions. They had varied
purposes and were directed generally to different areas of international
business. None of these conventions, with the exception of the ICSID
Convention, have achieved anything like the level of success of the New
York Convention.

1. The European Convention on International Commercial Arbitration

1961: This Convention, concluded during the cold war period, was aimed
at promoting east-west trade. It was developed by the United Nations
Economic Commission for Europe. It covers general issues of parties'
rights to submit to arbitration, who can be an arbitrator, how arbitration
proceedings should be organised, how to determine the applicable law,
and the setting aside and challenge of awards. Although it is still in
operation it never really achieved real international recognition. In fact,
the number of countries which have acceded to the Convention has
recently been increased.

2. The Washington Convention on the Settlement of Investment Disputes

between States and Nationals of other States was promoted by the World
Bank 1965: In the late 1950s and 1960s many of the former colonial
countries achieved their independence and were looking to take over
ownership and control of major concessions owned by foreign companies.
This Convention created the International Centre for the Settlement of
Investment Disputes (ICSID) which has jurisdiction over legal disputes
arising from investments between a contracting state and a national of
another contracting state. It was hoped that by the developing countries
accepting ICSID jurisdiction this would give investors confidence to
continue with and make further investments in such countries. The
Washington Convention has been ratified by over 130 countries.

3. The European Convention Providing a Uniform Law on Arbitration 1966:

This Convention was developed through the Council of Europe and was
aimed at providing a uniform national and international arbitration law. It
was signed by Austria and Belgium and ratified only by the latter. It has
never come into force.

4. The Convention on the Settlement by Arbitration of Civil Law Disputes

Resulting From Economic Scientific and Technical Co-operation of 1972:
This Convention had real influence and effect during the existence of the
Soviet dominated trading block in eastern and central Europe. It came
into force under the auspices of the Council for Mutual Economic
Assistance (Comecon) and provided for arbitration to resolve disputes
between trading entities from the countries members of Comecon.
Following the demise of the Soviet Union and the disintegration of
Comecon this Convention no longer has any real purpose or reason to
exist.

5. The Inter-American Convention on International Commercial Arbitration

of 1975: It is based on the New York Convention and is primarily
concerned with the recognition and enforcement of arbitration
agreements and awards but it is territorially restricted to the area of
America7. The Amman Arab Convention on Commercial Arbitration was
concluded in 1987. Its purpose was to establish “unified Arab Rules on
commercial arbitrations.” It established the Arab Centre for Commercial
Arbitration as a permanent organization which provides an arbitration
service in accordance with the rules in the Convention.

1. 1923 Geneva Protocol on Arbitration Clauses:

In this Geneva Protocol each of the Contracting States recognizes the

validity of an agreement whether relating to existing or future differences
between parties subject respectively to the jurisdiction of different
Contracting States by which the parties to a contract agree to submit to
arbitration all or any differences that may arise in connection with such
contract relating to commercial matters or to any other matter capable of
settlement by arbitration, whether or not the arbitration is to take place in
a country to whose jurisdiction none of the parties is subject.

Thereby in this present Protocol, each Contracting State reserves the right
to limit the obligation mentioned above to contracts which are considered
as commercial under its national law.
2. 1927 Geneva Convention on the Execution of Foreign Arbitral
Awards:

In the territories of any High Contracting Party to which the present

Convention applies, an arbitral award made in pursuance of an agreement
whether relating to existing or future differences (hereinafter called "a
submission to arbitration") covered by the Protocol on Arbitration Clauses,
opened at Geneva on September 24, 1923 shall be recognised as binding
and shall be enforced in accordance with the rules of the procedure of the
territory where the award is relied upon, provided that the said award has
been made in a territory of one of the High Contracting Parties to which
the present Convention applies and between persons who are subject to
the jurisdiction of one of the High Contracting Parties. Besides this some
necessary conditions are to be fulfilled to obtain such recognition or
enforcement.

The present Convention applies only to arbitral awards made after the
coming-into-force of the Protocol on Arbitration Clauses, opened at
Geneva on September 24, 1923. It does not apply to the Colonies,
Protectorates or territories under suzerainty or mandate of any High
Contracting Party unless they are specially mentioned.
3. 1958 Convention on the Recognition and Enforcement of
Foreign Arbitral Awards (New York Convention):

Recognising the growing importance of international arbitration as a

means of settling disputes, the Convention on the Recognition and
Enforcement of Foreign Arbitral Awards or rather can also be recognised
as New York Convention seeks to provide common legislative standards
for the recognition of arbitration agreements and court recognition, are
treated as “foreign” under its laws because of some foreign element in the
proceedings.

The Convention’s principle aim is that foreign and non-domestic arbitral

awards will not be discriminated against and it obliges parties to ensure
such awards are recognised and generally capable of enforcement in their
jurisdiction in the same way as domestic awards. An ancillary aim of the
Convention is to require courts of parties to give full effect to arbitration
agreements by requiring courts to deny the parties access to court in
contravention of their agreement to refer the matter to an arbitral
tribunal.

The Convention deals with the field of application, i.e. the recognition and
enforcement of foreign arbitral awards (arbitral awards made in the
territory of another State).
4. 2006 Recommendation regarding Interpretation of Article II
(2) and Article VII (1) of the New York Convention:

The Recommendation was adopted by UNCITRAL on 7th July, 2006. It

was drafted in recognition of the widening use of electronic commerce and
enactments of domestic legislation as well as case law, which are more
favourable than the New York Convention is respect is respect of the form
requirement governing arbitration agreements, arbitration proceedings,
and the enforcement of arbitral awards.

5.1961 European Convention on International Commercial

Arbitration (Geneva Convention):

Arbitration agreements concluded for the purpose of settling disputes

arising from international trade between physical or legal persons having,
when concluding the agreement, their habitual place of residence or their
seat in different Contracting States.

6.1962 Agreement relating on Application of the European

Convention on International Commercial Arbitration (Paris
Agreement):

This Agreement shall be open for signature by the member States of the
Council of Europe. It shall be ratified or accepted. Instruments of
ratification or acceptance shall be deposited with the Secretary-General of
the Council of Europe.

7.1965 Convention on the Settlement of Investment Disputes

Between States And Nationals of Other States (Washington or
ICSID Convention):
The Convention on the Settlement of Investment Disputes between States
and Nationals of other States signed in Washington on 18 March 1965,
established the International Centre for Settlement of Investment
Disputes (ICSID) within the World Bank Group. The purpose of the Centre
is to resolve, through conciliation and arbitration, disputes arising
between Contracting States and foreign investors.

ICSID arbitration and conciliation allows States and foreign investors to

settle their disputes on an equal footing within an international
institutional framework.
8. 1966 Convention Providing a Uniform Law on Arbitration
(Strasbourg Convention):

Each Contracting Party undertakes to incorporate in its law, within six

months of the date of entry into force of this Convention in respect of that
Party, the provisions of the uniform law contained in Annex I to this
Convention. Each Contracting Party has the right, in its law to supplement
the uniform law by provisions designed to regulate questions for which no
solutions are provided, on condition that such provisions are not
incompatible with the uniform law.

9. 1972 Convention on the Settlement by Arbitration of Civil Law

Disputes resulting from Relations of Economic And Scientific
Technical Cooperation (Moscow Convention):

In this Moscow Convention all disputes between economic organizations

resulting from contractual and other civil law cases arising between them
in the course of economic and scientific-technical cooperation of the
countries-parties to the present Convention shall be subject to arbitration
proceedings with the exclusion of the above disputes from jurisdiction of
the courts of law.

10.1975 Inter- American Convention on International Commercial

Arbitration (Panama Convention):
The Inter-American Convention on International Commercial Arbitration,
signed in Panama on 30 January 1975, is one of the main arbitral
conventions for the American continent. As for the others, these are the
New York Convention of 12 June 1958 on the Recognition and
Enforcement of Foreign Arbitral Awards and the Inter-American
Convention on Extraterritorial Validity of Foreign Judgements and Arbitral
Awards, signed in Montevideo on 8 May 1979.

11. 1976 UNCITRAL Arbitration Rules:

Adopted by UNCITRAL on 28 April 1976, the UNCITRAL Arbitration Rules

provide a comprehensive set of procedural rules upon which parties may
agree for the conduct of arbitral proceedings arising out of their
commercial relationship and are widely used in ad hoc arbitrations as well
as administered arbitrations. The Rules cover all aspects of the arbitral
process, providing a model arbitration clause, setting out procedural rules
regarding the appointment of arbitrators and the conduct of arbitral
proceedings and establishing rules in relation to the form, effect and
interpretation of the award.

2002 UNCITRAL Model Law on International Commercial Conciliation with

Guide to Enactment and Use:

Adopted by UNCITRAL on 24 June 2002, the Model Law provides uniform

rules in respect of the conciliation process to encourage the use of
conciliation and ensure greater predictability and certainty in its use. To
avoid uncertainty resulting from an absence of statutory provisions, the
Model Law addresses procedural aspects of conciliation, including
appointment of conciliators, commencement and termination of
conciliation, conduct of the conciliation, communication between the
conciliator and other parties, confidentiality and admissibility of evidence
in other proceedings as well as post-conciliation issues, such as the
conciliator acting as arbitrator and enforceability of settlement
agreements.

The UNCITRAL Arbitration Rules

In the early 1970s there was an increasing need for a neutral set of
arbitration rules suitable for use in ad hoc arbitrations. Once again it was
under the auspices of the United Nations that special arbitration rules
were prepared, this time by the Commission on International Trade Law
(“UNCITRAL”). The UNCITRAL Rules for ad hoc arbitration were “intended
to be acceptable in both capitalist and socialist, in developed and
developing countries and in common law as well as civil law
jurisdictions.”This is because the Rules have a “truly universal origin, in
particular their parallel creation in six languages (Arabic, Chinese, English,
French, Russian and Spanish) by experts representing all regions of the
world as well as the various legal and economic systems.” The UNCITRAL
Rules have achieved international recognition and are widely used. They
are autonomous and suitable for use in almost every kind of arbitration
and in every part of the world. Although originally developed for ad hoc
arbitration they have now been adopted by many arbitration institutions
either for their general rules or for optional use. Apart from the very wide
acceptance and use of the UNCITRAL Rules generally, perhaps the most
significant use has been their adoption, in slightly modified form, by the
Iran-US Claims Tribunal. The publication of over 800 awards and
decisions of the Iran-US Claims Tribunal has provided a jurisprudence on
which parties in international arbitrations, either under the UNCITRAL
Rules or in international arbitrations generally, can rely. This has
contributed to the development of a common standard for the conduct
and procedure of international commercial arbitrations.

The Model Law The Model Law began with a proposal to reform the
New York Convention. This led to a report from UNCITRAL to the effect
that harmonisation of the arbitration laws of the different countries of the
world could be achieved more effectively by a model or uniform law. The
final text of the Model Law was adopted by resolution of UNCITRAL, at its
session in Vienna in June 1985, as a law to govern international
commercial arbitration; and a recommendation of the General Assembly
of the United Nations commending the Model Law to Member States was
adopted in December 1985.The Model Law has been a major success. The
text goes through the arbitral process from beginning to end, in a simple
and readily understandable form. It is a text that many States have
adopted, either as it stands or with minor changes, as their own law of
arbitration. So far, over 40 States have adopted legislation based on the
Model Law, with some States, such as England, choosing to modernise
their laws on arbitration without adopting the Model Law whilst paying
careful attention to following its format and having close regard to its
provisions.

The Revised Model Law If the New York Convention drove

international arbitration onto the world stage, the Model Law made it a
star, with appearances in States across the world. Even so, since its
adoption by UNCITRAL in June 1985, the Model Law has lost touch with
the fast-moving world of international arbitration, in at least two respects:
first, the requirement for an arbitration agreement to be in writing, if it is
to be enforceable; and secondly, the provisions of Article 17 governing
the power of an arbitral tribunal to order interim measures of relief. The
Working Group met twice a year from 2000 onwards. It is a large group.
All 60 or so UNCITRAL nations are working members and there are a
number of participating observers. The consequent revisions to the Model
Law were adopted by the Commission in July 2006 and approved by the
General Assembly of the United Nations in December 2006. The
UNCITRAL Working Group addressed an issue, which caused considerable
controversy— namely, whether or not an arbitral tribunal should have the
power to issue interim measures on the application of one party and
without the adverse party or parties being aware of the application. Such
ex parte applications are a common feature of litigation before the courts.
The reason is apparent. If a party is told that there is to be an application
to prevent disposal of its assets, those assets may well have ‘disappeared’
before the application is heard. But are ex parte applications, made so to
speak behind the back of the adverse party, consistent with the
underlying basis of arbitration, with its necessary emphasis on treating
the parties with equality and its reliance on the independence and
impartiality of arbitrators? The Working Group - decided to allow such
applications, but only on strictly limited conditions.

International Commercial Arbitration is defined as a judicial

dispute that does not take place before a national court, but
before neutral private judges, called “arbitrators”.

International commercial arbitration is an extrajudicial dispute

resolution method that is used worldwide, largely to resolve
commercial disputes between commercial parties (companies,
corporations, etc.) of different nationalities.

The objective of arbitration is to preserve the competitiveness of

businesses by resorting to an alternative dispute resolution
system (ADR) that differs from those offered by ordinary justice.

With arbitration, one chooses a faster and more efficient course of action,
as well as a protection of confidentiality that would otherwise be
unavailable, the efficiency and confidentiality of the proceedings on the
one hand, and the stability of the decision on the other, which can gain
recognition worldwide.

Unlike the rulings of the various national courts, international arbitral

awards can be enforced in almost any nation.

Arbitral jurisdiction may be based on the will of the parties expressed in

the arbitration agreement or arbitration contract, or in arbitration clauses
(in which the parties agree to before the case has been raised) included in
existing commercial contracts between the parties.

It is an increasingly common practice for companies to

include international arbitration agreements in their commercial
contracts with other companies, so that when disputes arise, there is an
obligation to resort to arbitration.

Arbitration may also be used after the dispute has been risen. In that
case it is referred to as a presentation or filing agreement.

In the arbitration clause (an agreement inserted in a contract), the

parties stipulate that any future disputes, concerning the contract itself,
will be decided by arbitrators. In the arbitration agreement, the parties
must establish the time and manner of the arbitration proceedings and
the composition of the arbitration board; in addition to a series of other
expedients that the professional may make to ensure the efficiency of the
arbitration clause, which is often rendered null and void by the vagueness
of its content.

In this respect, the so-called Doctrine of Separability preserves the

validity of the arbitration clause contained in the contract, with respect to
the main contract in which it is contained.

A consequence of this autonomy is that the arbitration agreement may be

(and often is) governed by a different law than that applicable to the main
contract to which it adheres.

To this end, the choice of the place of arbitration and the preferred
arbitration method is of paramount importance, since otherwise the law of
that place will be deemed applicable in determining the validity of the
arbitration agreement.
The Laws of International Arbitration
The sources governing international arbitration are:

 The New York Convention of 1958 concerning the recognition and

enforcement of foreign arbitral awards,
 The arbitration rules adopted by the various international
arbitration bodies that the parties may choose to settle the
dispute (e.g., I.C.C. in Paris, L.C.I.A. in London, and the A.A.A. in
New York, etc.),
 The individual national jurisdictions in which the arbitral award
(measure) obtained must then be recognised.

Indian perspective

 Section 2(1)(f) of the Act defines an ICA as an arbitration relating to

disputes arising out of a legal relationship which must be considered
commercial,13 where either of the parties is a foreign national or
resident, or is a foreign body corporate or is a company, association
or body of individuals whose central management or control is in
foreign hands. Thus, under Indian law, an arbitration with its seat in
India, involving a foreign party is regarded as an ICA. All
arbitrations seated in India including ICAs are subject to Part I of
the Act. However, where an arbitration is seated outside India, Part
I of the Act would not apply, except Sections 9, 27 and 37, unless
the parties have agreed to exclude the applicability of these
sections. Prior to the 2015 Amendment Act, a literal interpretation
of Section 2(1)(f)(iii) would yield that even if a company had its
place of incorporation as India, an arbitration could still qualify as
an ICA if the central management and control of the company was
outside India. However, in the case of TDM Infrastructure Pvt. Ltd.
v. UE Development India Pvt. Ltd.,14 (“TDM Infrastructure”) despite
TDM Infrastructure Pvt. Ltd. having foreign control, the Supreme
Court concluded that “a company incorporated in India can only
have Indian nationality for the purpose of the Act”. Thus, though
the Act then recognized that arbitration involving companies with
management and control outside India as an ICA, the Supreme
Court still treated such arbitration involving foreign controlled but
Indian incorporated company as domestic arbitration. The 2015
Amendment Act deleted the words ‘a company’ from the Section
2(1)(f)(iii) thereby restricting the scope therein to only body of
individuals or an association. Therefore, the current position is that
if a company has its place of incorporation as India, then the place
of central management and control of the company is irrelevant for
the determination of the status of the arbitration. In a recent case,
where an Indian company was the lead partner in a Mumbai-based
consortium (which also included foreign companies) and was the
determining voice in appointing the chairman, the Supreme Court
held that the central management and control was in India.