International Arbitration Process - Assignment Example

International Arbitration “Answer to question The right to arbitrate by the parties to a contract has long been recognized under UAE laws. Of late, there have been increased tendencies in Dubai to use arbitration process. Under” Civil Procedure Code “of UAE, as per article 203(2) of DIAC, an arbitration needs to be in writing, which connotes that such agreement might be signed by the both parties to a contract. It is to be noted that in this case, there is an agreement between the company and the French Company which states that any dispute or difference arising out of or in connection with it shall be decided by arbitration in Dubai, under the Rules of the DIAC. As per Article 203 (5), if a plaintiff files a suit in a court, then, defendant should raise the issue and should derive the attention of the court as regards to the existence of an arbitration clause in the contract in the first hearing proceedings of the court. The courts in Dubai have jurisdiction over any matter before the commencement of arbitration and with regard to issues arising during the arbitration process that need the court’s approval or order or input. For instance, to get attachment orders or to get interim injunctions, mainly to preserve evidence. It is to be noted that once the arbitration proceedings have started, the Courts are probable to refer the issues to the arbitral tribunals. Further, an arbitration tribunal may seek the help of the court for interim measures or to punish a witness who is not attending the tribunal proceedings or who makes deposition falsely. During the first hearing itself, the party concerned should raise the issue before the court if he wants to stay the court proceedings on the footing that there is an arbitration clause that exists in the contract. If the opposing party fails to raise the issue before the court during its first hearing, else it would be construed that as if the company has waived its right to arbitration. If the parties fail to make consensus in the appointment of an arbitrator, the court’s help can be sought for the appointment. “Answer to question 2” Arbitration process is not only cost-effective as the judicial remedy is delivered faster than court proceedings which are warranted by law. Over the proceedings of the arbitration, the parties concerned will have greater degree of freedom. Arbitrators are coming from the professions like lawyer, engineers, financial and management backgrounds. Court proceedings are held in publicly whereas arbitration proceedings can be organized privately and in confidence. An arbitral award which is delivered by an arbitrator or by a tribunal will be regarded as final and will be binding the parties concerned and no appeal is available against such awards as in the case of court verdicts1. Arbitral awards given under DIAC will have the same impact as that of the verdict rendered by a court under the UAE law. Further, a verdict given by a court in Dubai cannot be implemented in other neighboring Arab nations whereas an arbitral award is enforceable in the neighboring Arab nations and in other nations around the globe also. It is to be observed that UAE is a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958. Due to this, any arbitral award rendered in Dubai will be binding on the other signatory nations to the treaty. In this case, the French company will be binding. As compared to court proceedings, arbitral proceedings are neutral. Arbitration process facilitates the opportunity for a true neutral panel of adjudicators, and this eschews the chances of perceived or actual bias on the part of the court. Arbitration offers neutrality means that parties have the right to select, where they would prefer to have their arbitration proceedings, in which language and by arbitrators of which nation. Further, the neutrality is further buttressed as the DIAC is a non-profit organisation dedicated to offer unbiased disputed resolution services and is neither controlled by government or private bodies. Court proceedings are time consuming as the courts are congested and overburdened with litigations. Further, the lower-court verdicts are appealable and when the final verdict is given by a superior court or Court of Cassation, parties to the case have to wait for years together. Whereas under DIAC, parties are motivated to have a speedy approach. Under DIAC , an arbitrator has to make his award within six months from the date on which he receives the file unless a longer duration has been accepted by the parties concerned or by the arbitrators or otherwise offered to them under the Rules. Unlike court proceedings, an arbitration process under DIAC offer confidentiality unless the parties otherwise consent. The details of the arbitration case cannot be divulged either by the arbitrators or by the DIAC employees. Thus, parties to an arbitration can safeguard their financial and business information from divulging to the public, and hence they prolong their business relationship even after their dispute has been resolved through the arbitration process. Compared to the court proceedings, arbitration process is inexpensive. Arbitration process minimizes the necessity for various litigation formalities and stages, which would eliminate unwanted expenses. Further, the arbitration cost payable to DIAC is considerably moderate as compared to court costs2. “Answer to question 3” Mediation is a casual voluntary process aimed to sort out disputes cordially through the mediation or intervention of third party who has no decision-making authority, and his verdict will not be binding and only recommendation in nature. A mediator is a neutral intermediary who assists parties in explaining the issues in dispute, which enables communications and helps in arriving at a practical solution in a harmonious manner. A dispute can be mediated if the same is commercial in nature, if at least one of the parties to the dispute is the member of the Dubai Chamber, the dispute in question does not fall under any other authority’s prerogative, and the dispute should be against a company or business establishment, and no arbitration or litigation process has already been commenced against the dispute in question3. Mediation is also recommended when the parties are of the opinion that they can arrive at a solution with the help of a neutral third party and thus mediation helps the parties to continue their business relations even after the resolution of their issue. In a business contract, parties can insert a “step-clause” in their contract. A step clause is nothing but a dispute-resolution clause that offers distinct initiatives to be followed, frequently terms precedent to the institution of a binding procedure such as litigation or arbitration. For instance, such initial initiatives could include at first stage discussion between two top officials, if it is not successful, then formal mediation, if mediation efforts fail, and lastly, parties can resort to arbitration or litigation4. Hence, the dispute between the Dubai Company and French Company cannot be settled through mediation as the contract is already having arbitration clause, and mediation will not be binding one.5 “Answer to question 4” A set of rules will help the smooth flow of the arbitral process. It will act as a guiding note as regards to nationality of arbitrators, number of arbitrators, language governing the arbitral process, fees to be paid to the arbitrators, places of arbitral hearing and the seat of the arbitration. Thus, these rules will act as a torch bearer for the procedures to be followed during the arbitral process. In these rules, time limits within with statement has to be submitted and length of the arbitral process will be mentioned. At the initial stage, DIAC rules were drawn in line with UNCITRAL Rules, and later final regulations are drawn from mixture of provisions from the World Intellectual Property Organisation (WIPO), International Chamber of Commerce (ICC), and American Arbitration Association (AAA), LCIA rules and Stockholm Chamber of Commerce. The set of rules of DIAC consists of rules regarding costs, arbitral tribunal interim measures, additional arbitration powers, enforcement, and closure of proceedings. The following procedure is generally followed in DIAC arbitral proceedings. A case has to be submitted to the arbitration through written statements of the witnesses. Before the arbitration proceedings commence, exhibits or documents have to be submitted in advance. Prior to calling the witnesses to depose, both the parties to the arbitration should make an opening statement. Witnesses have to sworn in and they have to corroborate their own statements by attestation. Sworn-in by a witness is to be given serious consideration as it will have wide ramifications. For instance, the UAE’s Court of Cassation which is the Supreme Court in UAE dismissed an arbitral award in Dubai Aviation Corporation v Bechtel in 2003 on the footing that the witnesses had not been correctly sworn6. It is to be noted that oaths given to non-Muslims, and Muslims are diverse. Once witness sworn and cross-examination are over, the parties to the dispute are required to forward a final written statement to the arbitrator. DIAC rules provide that an award should be made within six months, and the arbitrator or tribunal or executive committee has the power to extend the deadline for another six months7. “Answer to question 5” 5.1 – “Tribunal Establishment “ As per DIAC, the number of arbitrators should be uneven. Both the plaintiff and respondent have to appoint one arbitrator each and these two arbitrators will choose the third arbitrator who will function as the chairman of the arbitral tribunal8. Once the tribunal is established, and arbitrators are appointed, the DIAC will transfer the case to the tribunal after the payment of required fees by the parties concerned. Then, the tribunal in consultation with the parties, should fix the duration of the arbitration and extension of time limits if required9. With the consent from the appointed tribunal, parties to the dispute can shorten the prescribed time limit. The executive committee of DIAC can in some cases extend the time limits so as to permit the tribunal to complete their commitments and responsibilities. 5.2- Deciding about the Arbitral hearing meetings and the seat of the Arbitration Dubai will be always the seat of the arbitration as regards to commercial contracts entered in Dubai. However, the parties can decide any other place, which can be named as the seat of the arbitration if the circumstances of the case need the same. If other than Dubai is selected as the seat of the arbitration, the parties shall give substantiations for the preference of that place. Further, both the parties to the dispute should make written agreement on that issue. 5.3 –“Opening Meeting” The date and venue of the preliminary meeting are to be informed to parties to the dispute within thirty days after receiving case files by the tribunal. Further, the tribunal will also mention the dates for the presentation of documents needed such as defense statements and statement of claims. 5.4-Statement of Claims Submission If not submitted by the claimant already, then the claimant has to submit his statement of claim10 within thirty days from the appointment of the tribunal. If required, the arbitration tribunal has the authority to extend the deadline beyond thirty days for the submission of statement of claims. Attachments like evidence, documents, agreements, minutes of meetings and correspondence have to be enclosed along with the statement of claims by the claimant. The respondent has to forward his statement of defense on receipt of statement of claims or any notification from DIAC. Both statement of claim and statement of defense shall be submitted to the tribunal, DIAC and to the concerned opposite parties. Unless authorised by the tribunal, new claims or counter claims are prohibited from each of parties to the dispute. 5.5-Onus of Proof and Corroboration Both the statements of claims and defenses should be backed by evidence and proofs. Tribunal has the authority to vouch the authentic of such evidence. 5.6-Venue of the hearings The place of hearing can be decided by the tribunal after having consultations with the parties. During the hearings, expert witnesses may offer their observations. Parties to the dispute can decide whether to hold hearings in private or not.11 5.7-“Examination of Witnesses” The other party and the tribunal have to be informed fifteen days well in advance before the hearing about the witness of fact hearing with the full information, language, rule and address of the witness12. 5-8- Winding up of Proceedings If the tribunal is of the view that the information and corroborations gathered through various submissions and hearings are adequate for delivery of arbitral award, it may announce the closure of proceedings to the parties. Under restricted scenario, the tribunal may permit the new evidence if it finds it apt for the final award13. Final arbitral award should be released by the tribunal within six months after the transfer of the case file to it. Another six-month deadline extension can be given by the executive committee of DIAC if the valid reasons are offered by the parties or tribunal for such extension14. “Answer to question 6” Inquiries As per “Article 20.2 of DIAC”, meetings or hearings can be convened at a convenient place wherever tribunal thinks it proper after discussion with the parties. Parties to the dispute should be communicated by the tribunal about the schedule of hearings well in advance. In deciding the places of the hearings, the tribunal should exercise utmost care in the selection of these venues. “Answer to question 7” Under DIAC regulations, once the arbitration award is made, it is final and binding, and it cannot be appealed in any manner15. The losing party will have two options under the DIAC regulations such as within thirty days after the award is made, the affected party may forward a request to the tribunal for an interpretation for the award. Such interpretation will be regarded as part and parcel of the award. Within the thirty days from the receipt of the final award, the company (claimant) can cite any errors in arriving at values or calculations in the final award to the tribunal for recalculation and corrections. Read More