The Concept of the Implementation of the Provisions of Arbitrators - Research Paper Example

Compare Between Saudi Arabia and the United s in the Concept of the Implementation of the Provisions of Arbitrators Introduction Arbitration, a type of alternative dispute resolution, is a method for resolving disputes outside court rooms, where groups to a disagreement pass it on to one or more arbitrators or arbitral tribunal, whose decision, also known as an award, they concur to be bound (Auerbach 56). In essence, it is a form of a dispute resolution method whereby a third party assesses the proof in the case and imposes a ruling, which is legally binding for the two sides and implementable. Arbitration has benefited from its increasing popularity with business, as well as other users over the past five decades years (Auerbach 56). There are many reasons why parties opt to have their disagreements determined through arbitration, especially when it comes to international matters (Roy 921). Such reasons comprise of the need to avoid the local practices related to lawsuits in national courts, need to obtain a faster, as well as a more efficient verdict, the relative enforceability of arbitral awards and arbitration agreements as compared to national court judgments and forum selection clauses, the profitable expertise of arbitral tribunals, the parties' sovereignty to select and plan the arbitral procedures, discretion and other merits (Roy 921). While arbitration is guided by the UN International Commercial Arbitration Act of 1985, nations have modified the law to come up with their own arbitration laws (Roy 921). The United States, Canada, the United Kingdom, Germany and Saudi Arabia among others, have their own unique arbitration laws, even though they echo some of the provisions in offered in the UN International Commercial Arbitration Act of 1985. Saudi Arabia recently (2012) signed into law their new Arbitration Act and the United States has had a law standing on this subject since 1925 that was amended in 2007. This paper will compare between Saudi Arabia and the United States in the concept of the implementation of provisions by arbitrators. Arbitration in the United States Arbitration, in line with the United States law, is a type of alternative dispute resolution, which is a legal option to lawsuits whereby the groups to a dispute concur to submit their relevant positions to a neutral third party for resolution. In reality, arbitration is mainly utilized as an alternative to judicial hearings, especially when the judicial proceedings are perceived as too expensive, slow or inclined to one party (Auerbach 59). Arbitration, in the United States, is also utilized by societies as an alternate for formal law because they either do not have a formal law or the formal law is too harsh (McLaughlin 248). Labor arbitration, in the United States, comes in two forms: interest arbitration, which grants a way for settling disputes on the terms to be incorporated in a fresh contract when the groups are not capable of agreeing, along with injustice arbitration, which grants a way for settling disputes over the application and interpretation of a collective bargaining treaty (McLaughlin 248). Provisions to the agreements are not implementable at common law, but once the groups have actually forward a pending disagreement to an arbitrator or an arbitration tribunal, the team’s judgment is typically implementable. The logic for this was that the influence of the arbitrator arose exclusively from the joint consent of the groups to his authority (McLaughlin 249). However, by the moment a disagreement reached the level where one group opted to take it to an arbitrator or an arbitration tribunal, the other normally opted to take the matter to court instead. Therefore, devoid of any the consent of both groups to the arbitrator’s jurisdiction, he/she does not have the power to settle the case (Auerbach 59). Arbitration in the Saudi Arabia Following the heels of the recent reform of the arbitration law in Saudi Arabia, a new law came into effect on the March of 2012 (Cueto 1). The new law, which substitutes the related provisions of the Rules of Civil Procedure 1989 before the Board of Grievances, has had a particular effect on the implementation of arbitral awards, whether international or domestic (Cueto 1). Whereas it is well recognized that arbitration fully is an institution, which appears in Islamic law and that the lawful system of Saudi Arabia is founded on Islamic or Shari’a law, it might come as a shock to experts of international arbitration that rewards do not need authorization by a qadi, which is Islamic for a judge, in the Hanbali lawful tradition, as this school regards that an award already has the traits of a court ruling (Weiler 352). However, in practice, if the conflicting party is not ready to implement the award, then the verification by a judge should be seeked. This new law contains provisions, which affect all aspects of implementation of both foreign and domestic judgments, along with arbitral awards. Before the new Law, disagreeing groups had to forward applications for the implementation of foreign rulings and arbitration rewards to the Board of Grievances (Weiler 352). The process of arbitration before the Board was lengthy and too rigid since the Board was not formed just to hear implementation requests, but also to manage some of the more significant, commercial problems before Saudi courts (Cueto 1). Implementation of the Provisions of Arbitrators Under the UN International Commercial Arbitration Act, provisions issued by an arbitrator normally contained on the award can be issued in any nation and is freely implemented in any other contracting nation (Cueto 1). Defenses offered by this act include that the arbitration provisions were not valid under its governing law, or an arbitration group was under some incapacity, or one of the groups was not offered prior notice to the appointment of the arbitrator or an arbitration tribunal of the proceedings (McLaughlin 253). Another defense stated by the act is that the award incorporates matters that are way beyond the scope of the arbitration. Sometimes the arbitral tribunal composition is not in line with the agreement of the groups or with the regulations of the area where the hearing took place (Cueto 1). The UN acts also says that the award might not yet become compulsory upon the parties, or has been suspended by a proficient authority, either in the country where the settlement occurred, or pursuant to the regulation of the arbitration accord. Implementation of the Provisions of Arbitrators in the United States In the Unites States, each and every contracting state shall acknowledge arbitral awards as requisite and implement them in line with the regulation of the process of that particular state and any court that has jurisdiction shall verify the reward unless it finds one of the bases for deferral or refusal of enforcement or recognition of the reward specified in the articulated convention (McClendon, 58). Successful arbitration mainly is decided by the effective implementation of the arbitration award or provisions by the arbitrators (Auerbach 65). There are numerous bases for the implementation of an arbitral award (international or local) in the United States. The most valuable is the New York Convention, as well as its enabling legislation, belonging to chapter 2 of the U.S. Arbitration Act. Chapter 1 was used before the 70’s and can still be utilized if the New York Convention does not apply in the case because an award might be made in a nation that has not agreed to this convention (McClendon 65). Therefore, the United States uses these chapters all together. Other grounds are implementation devoid of any statute or agreement, implementation in line with bilateral agreements and implementation through acknowledgement of local or foreign judgment (McLaughlin 255). A party wanting to enforce provisions offered by an arbitrator in the United States under the convention simply needs to supply the originally authorized award or an authorized copy of the award, the original or legal copy of the agreement, as well as sworn or official translation within three years following the award (Auerbach 66). It is irrelevant whether the provisions of the arbitrator are the result of an institutional arbitration (McClendon 71). U.S. courts have original jurisdiction to listen to applications in order to confirm or dispute the awards, which are then treated as motions devoid of any jury trial. The court might ask for the deposit of security when the provisions by the arbitrator are challenged, and the verdict of verification has a similar effect and might be implemented as a judgment in an action (McLaughlin 256). At its best, the process is less costly, less prolonged and more efficient when compared to litigation. An arbitration tribunal or arbitrators themselves can be selected due to their special skills or high knowledge on the issue in dispute, an option that is usually not available in the customary court system. In addition, arbitral proceedings are private and not open to public criticism. A pro-implementation arbitration regulation also supports trade as groups are less vulnerable to the doubts of international litigation, as well as the hazards of global business such as currency instabilities and governmental changes (Auerbach 66). Section 208 of the American Arbitration Act provides that the other chapter of the act shall apply to proceedings brought under the Convention only if they conflict with the enforcing legislation or the Convention (McClendon 71). Inconsistencies between this section and the Convention, which grants that arbitration awards shall be implemented according to the Forum State’s regulations, have established some problems under the United States law (McLaughlin 255). For instance, domestic regulations urge that arbitration agreements incorporate entry of judgment clause whereby the groups agree that a court ruling over an issue shall be endorsed in the reward. No such agreements are present under the Convention. Processes incidental to the implementation of an award, on the other hand, such as discovery or attachment, are regulated by the United States law in section 208, as well as in Article III (McClendon 72). Courts have established that pre-judgment interests, provisions of post-award, for instance, are acceptable under the Convention. Courts, in the United States, have for many times confirmed that the public law in favor of both local and international arbitration is tough (Auerbach 67). The Convention is broadly relevant to disagreements between natural and legal individuals including independent states. It is also applicable to awards produced in the terrain of another state, as well as in states that are not incorporated in the implementing procedure (McLaughlin 255). The significance of a distinction between the domestic and foreign award is, therefore, unquestionable. An award produced in the U.S. in arbitration between international groups is implementable under section 207 (McLaughlin 255). Likewise, a ruling made in the U.S. in arbitration between local parties is implementable under section 9 and should be implementable under section 207 (Born86). If the ruling is made in another country, then it is through definition implementable under section 207 and will certainly also be implementable under section 9 (McClendon 72). The Convention managing the provisions of arbitrators allows a contracting state to make two restrictions or reservations on usability. One restricts Convention regulations to commercial disagreements, and the other is rooted in reciprocity (Auerbach 67). The U.S. has assumed the reciprocity reservation, which signifies that provisions made in the terrain of a nation that is not a contracting nation is entitled to implementation in the U.S. rooted in the Convention, even though it might be guided in Section 9 (McLaughlin 257). Also, the U.S. has bent the commercial reservation in order for it to be permitted by the Convention, which allows a contracting nation to restrict its application of the Convention to distinctions emerging due to legal relationships between national law, as well as commercial law (McClendon 73). There is no strict definition of commercial neither in the New York Convention nor in the facilitating legislation. Section 202 includes applicable definitions if the first and the second section that, sadly, are not as useful either (Born 88). In the United States, procedural deficiencies should be brought up by the group shielding the implementation action, which then has the burden of attestation. Invalidity of the provisions given by the arbitrator might arise because there was not actual agreement between the two parties, or the agreement was not submitted to the arbitrator (McClendon 73). Sometimes the provisions of the arbitrator might not be enforced because the losing group was not offered prior notice to the arbitration. Therefore, it was not able to present its case well. This cover primarily restricts the application of the forum state’s regulation due to process (Auerbach 68). Courts in the United States, in essence, look at the overall result and do not overturn and provision offered by the arbitrator since the defendant was not able to offer some parts of the case like a witness (Born 89). Implementation of the Provisions of Arbitrators in Saudi Arabia Since 2012, when Saudi Arabia passed its new Arbitration Law, more and more international investors have opted to arbitrate in Saudi Arabia instead of the international forum (Roy 924). Through rationalizing and simplifying its dispute resolution method, the nation is said to have modernized its Arbitration Law to meet global standards. Saudi Arabia’s Arbitration Law, mainly modeled on the UN Commission of International Trade Law, is meant to remove the unpredictability concerned in bringing an arbitration claim in Saudi Arabia, as well as arbitral awards, in their nation (Roy 924). Saudi Arabia has yet achieved another great milestone in the modernization of its global arbitration law. The nation has just developed a new Enforcement Law. The new law has had a positive impact in the implementation of arbitral awards (Rawlings et al 97). Prior to the enactment of the new Enforcement Law, arbitration groups had to forward applications for the implementation of arbitration awards to the Board of Grievances (Roy 925). This procedure normally was long and severe, which led to the languishing of many awards in front of the Board. In addition to delays, parties seeking the enforcement of awards were exposed to a retrial of the dispute on the merits by the Board. The new law is a crucial step towards modernization with regards to Saudi Arabia’s arbitration law as it, in essence, assures that the value of the disagreement will not be revisited (Roy 925). Therefore, once provisions by of an arbitrator have been passed and declared void, then they cannot be revisited. However, it is yet to be seen how this new regulation will function in practice (Rawlings et al 97). For instance, unlike in the United States, the new Saudi Arabian law does not moderate the danger of unfavorable public policy deliberations such as awards, which were considered by international arbitrators not versed in the Saudi Arabian law or other Islamic concepts. An arbitral award, which defies Saudi public policy, for instance, by granting riba (which is Islamic for interest) that is prohibited under Shari’a, may experience some issues when it comes to enforcement (Roy 925). In such cases, implementation adjudicators might need the entire damages aspect of the provisions by the arbitrator to be reexamined, particularly when the payment of interest is not severable from the reward. Despite such doubts, the new Saudi Arabian law is a significant step in the right path for Saudi Arabia’s global arbitration regime (Rawlings et al 97). In trying to adopt the Western way of life, Saudi Arabia faced tough questions concerning the desertion of their traditional history (Roy 926). Saudi Arabia was, in the past, aggressive to the acknowledgment and implementation of foreign arbitral awards, considering these awards opposing to the Saudi Arabian public policy and law (Rawlings et al 97). In the 50's, courts in Saudi Arabia declined to implement numerous international or foreign arbitral awards, seeing them as corrupting and impolite to Islamic legal system (Roy 926). Saudi Arabian governmental institutions, in 1963, were barred from using arbitration as a way of settling global commercial disputes. Furthermore, the nation passed a law in the 1983, which further constrained its government's application of arbitration (Rawlings et al 97). However, the nation’s implementation of the New York Convention confirms a reduction of its historical opposition to global commercial arbitration. Now, provisions from non-Saudi arbitrators are fully implemented fairly without considering the Islamic laws (Roy 926). Non-Saudi investors can now more confident that Saudi Arabian courts will honor a disagreement and fully implement the arbitration award granted by a non-Saudi Arabian court. Article V(2) (b) of the new Enforcement Law, nevertheless, point out that Saudi Arabia is not needed to acknowledge non-domestic arbitral awards, which oppose its public policy (Roy 926). Privatized corporations in Saudi Arabia, unlike the country’s governmental institutions, are not excluded from the global arbitration process (Rawlings et al 98). In reality, arbitration as a way of dispute settling between private groups opposing in Saudi Arabia is endorsed by the Saudi Arabian regime (Rawlings et al 98). Therefore, provisions of arbitrators from private groups are fully implemented by the nation’s regime whether the agreements were agreed inside Saudi Arabia or in another country. Till Saudi Arabia's implementation of the Convention, nevertheless, Saudi Arabian law needed foreign suppliers submitting to arbitration in Saudi Arabia to endorse the Saudi Arabian laws (Roy 927). Non-Saudi Arabian institutions were, hence, unwilling to undertake arbitration in Saudi Arabia for the same basis, which they opposed, Saudi Arabian litigation (Rawlings et al 98). The nation’s arbitral process was in favor of Saudi Arabian parties. In addition, any non-Saudi award possessor seeking implementation against assets in Saudi Arabia was needed to forward the provisions of the arbitrator to a Saudi Arabian court (Roy 927). Court, in Saudi Arabia, utilizing the nation’s law, would perform its own inquiry to decide whether or not to implement the award. Before the Saudi government accepted the Convention, courts in this country primarily declined to implement provisions provided by arbitrators of non-Saudi Arabian groups. Conclusion This paper has compared between Saudi Arabia and the United States in the concept of the implementation of the provisions of arbitrators. Arbitration, in line with the United States law, is a type of alternative dispute resolution, which is a legal option to lawsuits whereby the groups to a dispute concur to submit their relevant positions to a neutral third party for resolution. The new Arbitration Law of Saudi Arabia, on the other hand, which substitutes the related requirements of the 1989 Principles of Civil Procedure, has had a particular effect on the implementation of arbitral awards, whether international or domestic. The law that stands out is the United States Arbitration Law, which easily accepts international arbitration standards unlike the Saudi Arabian Arbitration Law, which even though it accepts international arbitration standards, still has some implementation issues. Only time will reveal whether Saudi Arabia will adhere to the provisions of the Convention devoid of applying Article V(2) (b) to avoid the need that it acknowledges and implements non-Saudi arbitral awards. However, Saudi Arabia can successfully nullify the provisions of the Convention through citing Article V (2) (b). Elimination or amendment of Article V (2) (b) will offer the global community rules needing Convention signatories to implement all international arbitral awards, which is the correct objective of the Convention. Works Cited Auerbach, Jerold S. Justice without Law?: Non-Legal Dispute Settlement in American History. Oxford: Oxford University Press, 2011. Print. Born, Gary Y. International Civil Litigation in United States Courts. 4th ed. New York: Aspen Publishers, 2011. Print. Cueto, Santiago A. Enforcement of International Arbitration Awards in Saudi Arabia Just Got Easier. N.p, 2013. Web. McClendon, Stewart J. “Enforcement of Foreign Arbitral Awards in the United States.” Northwestern Journal of International Law & Business 4.1 (2002): 58-74. Print. McLaughlin, Joseph T. “Enforcement of Arbitral Awards under the New York Convention - Practice in U.S. Courts.” Berkeley Journal of International Law 3.2 (2007): 248-273. Print. Rawlings, Jonathan et al. New Arbitration Law in Saudi Arabia. New York: Freshfields Bruckhaus Dreinger, 2012. Print. Roy, Kristin T. “The New York Convention and Saudi Arabia: Can a Country Use the Public Policy Defense to Refuse Enforcement of Non-Domestic Arbitral Awards?” Fordham International Law Journal 18.3 (2002): 918-964. Print. Weiler, ToJJ. “Leading Cases from the ICSID, NAFTA, Bilateral Treaties and Customary International Law.” International Investment Law and Arbitration 45.6 (2013): 351-399. Print. Read More