Week 1 (Introduction and a little bit of all) Flashcards
What is arbitration
A private system of adjudication, resolving disputes outside the judicial system.
In most instances, arbitral award is a final and binding decision, producing an award that is enforceable in a national court.
Main characteristic of arbitration
Consent: parties consent is the source and limit of an arbitrator’s power and is linked to the submission agreement. If they do not have an arbitration clause in their contract, they can still enter into an agreement to arbitrate after a dispute has arisen.
Nongovernmental decision makers
Arbitrators are private citizens, they don’t have to be lawyers either. They are independent and impartial
The arbitral award is…
…final and binding, and cannot be appealed to a higher level court. Once a party’s award is recognized in the enforcing jurisdiction, it is generally considered to have the same legal effect as a court judgement.
Advantages of arbitration
- The likelihood of obtaining enforcement, by virtue of the New York Convention that has 156 state parties (so very widespread enforcement).
- Neutrality of the forum (no home advantage)
- Ability to keep proceedings and resulting award confidential.
- Choice of arbitrators with subject matter expertise.
- Shorter process.
- No multiple appeals of the decision.
Disadvantages of arbitration
- Less discovery in this kind of case means less chance for a claimant to meet its burden of proof
- Lack of any significant right of appeal.
- Arbitrators have no coercive powers, so no power to penalize a party if it fails to comply with a tribunal’s request
- In multiparty disputes, arbitral tribunal (arbitrator’s) don’t have the power to join all relevant parties. This is because the tribunal’s power derives from the consent of the parties, and if a party has not agreed to arbitrate, it cannot be joined in the arbitration.
- The pool of experienced international arbitrators lacks both gender and ethnic diversity.
The regulatory framework (imagine an upside down triangle)
International treaties (above) International arbitration practice (above) national laws (above) arbitration rules - all underpinned by arbitration agreement.
On the pyramid, the framework expands in terms of scope and applicability before the immediate parties (so international treaties have most scope and applicability and so on…)
The regulatory framework: arbitration agreement
Underpinning for the regulatory framework governing the private dispute resolution process. If the arbitration agreement is not valid, then there is no legal basis for arbitration
Who chooses the arbitration rules?
The parties! These rules, which apply to the arbitrations of all the parties that choose them, can be modified in a particular case by the arbitration agreement.
Role of national laws in arbitration
Both the arbitration law of the seat of the arbitration (lex arbitri) and the substantive law chosen by the parties will come into play
Note! Many countries have adopted the UNCITRAL Model Law on International Commercial Arbitration as their arbitration law
What is institutional arbitration?
Arbitration with an administering institution involved.
Advantages of institutional arbitration
- Institutional rules ensure that the arbitrators are appointed in a timely way.
- Arbitration moves along in a reasonable manner and that the parties pay fees and expenses in advance.
- An award rendered under the auspices of a well-known institution may have more credibility in the international community and the court.
What is ad hoc arbitration?
Arbitration with no administering institution.
Advantages of ad hoc arbitration
- Parties are not paying the fees and expenses of an administering institution.
- Parties also have more opportunity to tailor a procedure very carefully to the particular kind of dispute.
- Parties can choose their own rules or UNCITRAL Arbitration Rules
Disadvantages of ad hoc arbitration
Either party may engage in the deliberate obstruction of the process, thereby parties will need to seek the assistance of a Court
Can State’s engage in arbitration?
State or state-owned entities are generally immune from suits by individuals or companies. However, if a state or state-entity engages in commercial deal, and especially if it enters into an arbitration agreement with the other contracting party, it will be considered to have waived immunity and will be held to its agreement to arbitrate.
What is conciliation?
Conciliation involves a third party who will impartially and independently help the parties resolve their dispute. It is different from arbitration as it is non-binding.
Expert determination
Highly technical question that involves experts of the issue area. The final decision is usually binding, but the parties can agree to use an expert under rules that permit a non-binding opinion.
Mini-trials
Panel composed of one neutral decision maker and one executive from each of the companies involved in the dispute. The final decision is non-binding, but this serves the purpose of letting high-level executives know what is at stake, and provides the opportunity for them to resolve the dispute at an early stage to avoid expensive arbitration or litigation.
Last-offer arbitration (baseball arbitration)
Technique within an arbitration to try to bring both parties closer together in terms of what the amount awarded should be. Each party states its best offer as to the amount it thinks should be awarded, and the arbitrator has only the ability to choose either one proposal or the other, and cannot choose any other amount (each side has incentive to be reasonable).
Steel and Morris v UK
Concerned Article 6 ECHR, in particular: access to justice and equality of arms (6(3)).
The ECtHR found that the Applicants’ right to a fair trial (although important to state it is not an absolute right and must conduct considerations as in bullet points just below) was violated under Article 6 of the ECHR and that their leaflets were protected under Article 10’s freedom of expression.
The Applicants, Steel and Morris, were associated with the activist collective London Greenpeace, which began an anti-McDonald’s campaign. The Applicants handed out partially libellous leaflets critical of McDonald’s, for which they were imposed with a hefty fine and upheld in English Courts of Appeal.
The European Court reasoned that since there was a vast inequality between Steel and Morris and McDonald’s, and that denying legal aid to the Applicants deprived them of their ability to present the case effectively, and therefore violated Article 6.
In addition, the court noted that there was strong public interest in the opinions of non-mainstream groups regarding the environment and health.
Lastly, the court drew upon the need for democratic societies to allow all campaign groups, including London Greenpeace, to carry out their activities.
Court also took into account →
1. Importance of what is at stake for the applicants:
- In this case, a lot at stake, and they were the defendants in the case
2. What is the complexity of the relevant law:
- Relevant UK law was quite complex
3. What is the capacity of the applicants:
- They should have been given legal aid considering they were individuals vs a giant powerful multinational company - which is related to Article 6(3) equality of arms, and that both parties should be able to use the same instruments.
Micallef v Malta
Concerned independence and impartiality, Art 6(1)
- Background: The applicant, Mr. Micallef, his sister was involved in a civil dispute with her neighbour. A favourable judgement of the lower court was set aside on appeal. The applicant’s sister instituted constitutional proceedings, alleging that the president of the court of appeal had lacked objective impartiality because of his family ties with the other party’s lawyer. After his sister’s death the applicant took over the constitutional proceedings which were subsequently dismissed. Then he goes to the ECtHR.
Complaint:
- Mr. Micallef complained that the Court of Appeal had lacked objective impartiality, thus his sister’s trial had not been fair
Court’s ruling:
- Impartiality normally denotes the absence of prejudice or bias and its existence can be tested in various ways.
The existence of impartiality for the purposes of Article 6 (1) must be determined according to a:
- (1) Subjective test evaluating the personal conviction and behaviour of a particular judge - that is, whether the judge held any personal prejudice or bias in a given case. For the subjective test, the personal impartiality of a judge must be presumed until there is proof to the contrary.
- (2) Objective test - whether the tribunal itself and, among other aspects, its composition, offered sufficient guarantees to exclude any legitimate doubt in respect of its impartiality.
- For the objective test, it can be found that a judge lacks impartiality if there are ascertainable facts that give rise to doubts about a judge’s impartiality to an external observer, for example, hierarchical or other links between the judge and other actors in the proceedings. This implies that, in deciding whether in a given case there is a legitimate reason to fear that a particular judge or a body sitting as a bench lacks impartiality, the standpoint of the person concerned is important but not decisive.
- The Court was of the view that in the particular case the close family ties between the opposing party’s lawyers and the chief justice sufficed to objectively justify fears that the presiding judge lacked impartiality. Noting that the law also provided no possibility to challenge the judge, the Court found a violation of the right to fair trial.
This case also shows the importance of impartiality and independence, as a fundamental principle, relevant for arbitration.
Art 6(1) ECHR: Independence vis-a-vis…
Other state powers (legislator, executive)
Art 6(1) ECHR: Impartiality vis-a-vis…
The parties to a trial
