Arbitration Law & Rules – a Global Perspective (Part 3)

In the Previous article, we discussed what an Arbitration Agreement or Clause is

In this article we consider what the overarching global rules or Law which governs International Arbitration.

Three Pillars of Global Arbitration Rules/Law

The universally accepted three branches or pillars of international arbitration are:

  • Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention)
  • United Nations Commission on International Trade Law (UNCITRAL) Model Law on International Commercial Arbitration (Model Law)
  • UNCITRAL Arbitration Rules

New York Convention

States that may have ratified the New York Convention have the ability to enforce a foreign arbitral award in the State of a corresponding signatory of the New York Convention.

This covention provides one of the key instruments in international commercial arbitration.

Article 1(1) summaries the scope:

  1. This Convention shall apply to the recognition and enforcement of arbitral awards made in the territory of a State other than the State where the recognition and enforcement of such awards are sought, and arising out of differences between persons, whether physical or legal. It shall also apply to arbitral awards not considered as domestic awards in the State where their recognition and enforcement are sought.

If a State is not a signatory to the New York Convention one must pose the question very early on as to whether a successful award will be able to be in enforced in that jurisdiction.

Whether a State has ratified the New York Convention is perhaps the first question parties should be determining.

In the alternate some signatories of the New York Convention may well have adopted it but still have a low enforcement rate. Great care must therefore be taken and proper analysis given to each State and the type of award to be enforced.

Model Law

Many states simply adopt the Model Law verbatim. The Model Law provides a universal set of principles rather than a global law as such. It provides States and arbitral tribunals a similar set of procedures to govern all phases of an arbitral hearing, and associated background law.

The UNCITRAL summaries the scope:

The Model Law is designed to assist States in reforming and modernizing their laws on arbitral procedure so as to take into account the particular features and needs of international commercial arbitration. It covers all stages of the arbitral process from the arbitration agreement, the composition and jurisdiction of the arbitral tribunal and the extent of court intervention through to the recognition and enforcement of the arbitral award. It reflects worldwide consensus on key aspects of international arbitration practice having been accepted by States of all regions and the different legal or economic systems of the world.

An example of a state adopting the Model Law in its totality, save for minor adjustments, is the Singapore International Arbitration Act 1994 (IAA). The preamble of the IAA provides that the purpose of the act is to ‘make provision for the conduct of international commercial arbitrations based on the Model Law’.

The IAA provides within section 3:

Model Law to have force of law

3.—(1)  Subject to this Act, the Model Law… has the force of law in Singapore.

Arbitration Rules

Similar to the Model Law the UNCITRAL Arbitration Rules, provide a universal accepted set of principles, which assist states, and arbitral institutions in developing their own procedural rules to govern the proceedings of an arbitral hearing.

UNCITRAL provides the scope as:

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.

Arbitral institutions may develop their own set of procedural rules. Such examples include:

  • Rules of Arbitration Of The Vietnam International Arbitration Centre; or
  • Singapore International Arbitration Centre Rules

Both bear a striking resemblance to the UNCITRAL Arbitration Rules

Importantly, parties should be thoroughly familiar with what rules are being utilised within the arbitral proceedings and whether they are adopting a unique set of tribunal rules, or similar.

Small but important variations can and do exist

Does the State Law Supersede Arbitration Law

Each State may, or may not have adopted the above law or rules into the state law.

To the extent the State have ratified each set of Laws/Rules into national law will be the extent that they are applicable and enforceable.

Signatories to the New York convention, for example may be a signatory save for the principle of reciprocity, where in summary, a State may choose to only allow an award to be enforced in their jurisdiction if the reciprocal state has also adopted the New York convention.

Article 1(3) provides:

  1. When signing, ratifying or acceding to this Convention, or notifying extension under article X hereof, any State may on the basis of reciprocity declare that it will apply the Convention to the recognition and enforcement of awards made only in the territory of another Contracting State

Key Takeaway: practitioners and parties should be very careful in examining which rules apply in each State.

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