Reception and Enforcement of International Arbitration Orders and Awards

Introduction

Considering international commercial relations the arbitration process is important and considerably more advantageous than the litigation offered through the traditional national courts. In the modern world where the world is viewed as a global village arbitration remains a significant International instrument through which the rule of law can be uniformly implemented in International commercial disputes. For this reason cooperation of national courts is necessary lack of which such arbitration orders or awards cannot be enforced. Harmonized enforcement of global arbitration law however is a complicated exercise in that recognition, reception and enforcement of international arbitration orders and awards vary from one jurisdiction to another. The recent published Guide to National Rules of Procedure for Recognition and Enforcement of New York Convention Awards by the ICC International Court of Arbitration is a step towards the right direction. However there are significant differences in the primary ideas such as the level to which the perception of a temporarily arbitrative order can be made possible and the overall effects of such an award in the respective national courts. In addition there are variations and debates on whether a foreign award can be enforced in another country regardless of the challenges that may be ongoing against it in the country of arbitration. Matters of conflicts with state jurisdiction is therefore a significant part of the challenges that faces the implementation of international and regional arbitration orders and awards.

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This paper focuses on how the international arbitration law should improve its system and deliver harmonized global solution on International Commercial Disputes.

The traditional formation of the International commercial arbitration

The international commercial arbitration is drafted based on the values of the common law and civil law. These were coined together through guidelines developed by the International Court of Arbitration (ICA), International Chamber of Commerce (ICC), and the International Bar Association (IBA). In an effort to balance the common law and civil law an assumption was made that the two represented a composite legal tradition that governs International Commercial arbitration. The assumption preceded decades of intensive work that witnessed the establishment of international arbitration procedures and principles of the rule of law that put together the two legal traditions. The international arbitration community seeks to retain the famous traditions that arbitrators and counsel are used to and comfortable with, including the rules of freedom of contract and doctrines of procedures and evidence governing arbitral hearings (Doujani, 2003).

The question on the rigidity of the common laws and civil laws have sparked endless debates in the recent times, on whether they are sufficiently harmonized in the way they operate so as to qualify their overall status in the formulation of rules and laws that govern the international arbitration process. The international commercial arbitration is seen to be relying unduly upon the two traditions at the expense of national legal doctrines that run according to diverse and changing legal structures. Such structures are in extent based on political and socio – economic platforms, for example its origin may be related with the rising of constitutional democracy and liberal governance that impacted on existing legal traditions especially freedom of contract. Similarly the origin of such traditions may be derived from its informal societal practices where business agreements are settled over the phone as opposed to having them legalized before lawyers and provide for dispute resolution mechanisms. In addition the diverse national legal cultures may evolve from religious forces or engraved in renowned social patterns that may impact on it and change it with time. The working of legal cultures is outlined both in its theoretical operations and the actual practical functioning. The development of the legal culture may also be as a result of law related social values. Traditional arbitration includes a set of influences such as national legal systems and custom based legal systems. However implementation of the local arbitration can also encompass globally recognized traditions based on international arbitration procedures and guidelines. (Drazohal, 2000).

International commercial arbitration in the other had uses a distinct formal and public stature that reflects its modern norms as practiced in the Permanent Court of Arbitration (PCA). The court is mandated to resolve international disputes arising between States and either other States or private entities. The norms of the court are made public and its procedures formalized to suit its legal mandate in resolving the ever evolving disputes between private and public international laws. The complexity of the International commercial arbitration’s mandate today is mainly due to realignment of major economic alliances and the tensions regarding global free trade both of which attracts great global political interests and competition between States and regional trade alliances. These difficulties have sparked the need to establish a discernible global based legal norm that will encompass all these diverse differences and attempt to resolve them through arbitration (Domke, 1951).

Development of any legal culture is centrally shaped and influenced by the political, social and economic forces that play during its evolution and formation. This however elicits discussions to the nature of the relationship between social values and legal cultures and the influence that each has on the other. For example, the extent in which the liberal democracy has in the formation of a nation’s legal culture through which the entrenchment of liberty of contract is enacted. Similarly, the extent in which the legal cultures respect the contractual agreements imbedded within the cultural context. The arbitration proceedings is normally on the basis of the parties agreement and therefore understanding how such agreement can be arrived at among the States and regional alliances is paramount in the effective learning of the functions of international arbitration process. In addition, learning how law and culture inter relates in their operations within the context of international commercial arbitration, is equally significant.

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However, in practice understanding the operations of an established legal culture within the framework of international commercial arbitration is a complex affair. The reason for this is that the actual measurements for such an operation in a given cultural context are difficult to quantify in a global environment. For example, informal business deals concluded over phone typifies a domestic culture in business where trust in lawyers who concentrate more in resolution of conflict rather than in avoidance of probable conflicts, is lacking. This culture is however not tenable in a global business environment where cultural diversity is evident thus making it difficult to strike informal business deals. There are a few studies that have tried to measure the effects of diverse legal cultures on international commercial arbitration but detecting enough evidence relating to the attributes of global arbitration culture has proved a complex affair (Dore, 1993).

The fact that legal cultures are often subject to national cultural practices that are never static, has further complicated attempts towards identification of a harmonized legal norm in international commercial arbitration. For example, traditionally Japanese businesses are generally characterized by their distinct non conflict nature in their contractual relationships. The business communities base their operations on the famous Japanese epic 16th century tradition referred to as “namawashi”. It provides for the business communities to assist each other in the face of difficult circumstances not because they expected them to reciprocate but as a sign of embodiment of business unity built on mutual support. Such a tradition cannot be expanded beyond the Japanese national boarders without wide variations in its practice and meaning. Such a State as Japan has its own ways and means to protect its economic interests that sometimes demands for aggression towards intrusive international traders and investors who find no benefit from the localized tradition of non conflict business dealings. For this reason it may be recommended that State organization such as the Japan’s Commercial Arbitration Association be encouraged and supported to conduct their international businesses in a way that will promote resolution of international, regional and local commercial disputes. (Ishimoto, 1963).

Considering the complex nature of both public and private vested interests on the legal arbitration culture in international commerce, it can be concluded that analysis of the diverse national cultures aimed at understanding its nature may lead to dilution of its structures. In essence arbitrators may be misinformed on the relevance and significance of the role such national legal cultures have in the commercial arbitration process. Errors resulting from attempts to establish the roots of national cultural business practice and norms must not justify rejection of such worth while enterprises. Analyses of national business legal cultures such as those related with international commercial arbitration should assist to comprehend the attributes of the business culture in question as well as its application in evolving global business community and international commercial arbitration. Trends in national business cultures can be closely monitored and sought to establish more consistent legal practices that are in line with the expected legal framework and thus be used in the development of relevant responses to national cultural changes. Demonstration of such responses to institutional changes within international commercial arbitration is seen in formation of new domestic and regional arbitration institutions for international commerce (Lowenfeld, 2002).

International commercial arbitration originates from various discrete national cultural differences and the arbitration process is therefore effected by differing legal national cultures. Such influence comes about when international commercial arbitration is founded on discrete legal norms, for example when civil law affects or restricts the acceptance to witness in arbitration procedures. Such differences create a need among the business communities to develop tailor made arbitration services as shown by established uniform global procedures to guard business registered patents from unlawful use by unauthorized persons. These cultural influence whether deliberate or otherwise, significantly affect the arbitration culture and therefore the international commercial arbitration is not as a result of single arbitral culture but an amalgamation of variable national legal cultures (Schwartz, 2008).

The place of common and civil law in international commercial arbitration

From the point of view of the international commercial arbitration, it is possible to have the legal traditions categorized under international, regional and local traditions. The local based legal traditions contain the practices and rules of a particular state’s legal framework. In the other hand regional legal traditions encompasses practices and laws of regional based institutions or organizations for example the European Union and the commonwealth nations. International legal traditions encompass organizations or institutions that are formed and run by several States, for example the World Trade Organization and International Monetary Fund. In essence therefore, the international commercial arbitration together with the arbitration lawyers and counsels that work under it can be seen to basically originate from an amalgamation of civil law traditions and common law traditions that are brought together by international institutions like the International Chamber of Commerce (ICC). International arbitration codes for example, practices and laws have basically been sourced largely from civil law traditions and common law traditions. Their effects on modern arbitration is strengthened by the fact that business interests have traditionally converged at the major world cities especially in Europe and United States of America (USA) and Canada where the Common and Civil law frameworks are in operation. Latin America’s arbitrators have important legal codes in common with Japan and China that can basically be traced back from their civil laws and common laws that were found in their respective national legal jurisdictions. In Africa, America and Asia legal traditions were influenced and shaped up through many years of colonialism (Hamilton, 1999).

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An assumption that international commercial arbitration is simply a replica of the amalgamation of the common and civil law tradition is however misguided. This is because in practice common and civil law traditions differ significantly from one country to another and from time to time. The legal traditions on which the international commercial arbitration is governed in the 21st century can also not be entirely based on the auspice of the common and civil law traditions. Historically the civil and Common law traditions globally were dominant in the international arbitration, with the birth of modern states this dominance was nationalized and regionalized as national laws evolved. The civil and common law traditions have failed to measure up with the influence in demand for new political frameworks and systems such as in socialist law where various primary principles are understood and exercised differently. The stratification of international communities along racial, religious and ethnic lines has also sparked significant changes in the manner that the international legal systems are executed and maintained. Changes in the arbitration itself has also been instituted to meet the rising demand of the changed socio – political and economic scene, for example the International Economic and Trade Arbitration Commission of China is strategically playing a significant role in international commercial arbitration (Houzhi, 1990).

Civil lawyers around the world are developing significant uniform commercial codes to serve in modern common law systems. The global legal codes exhibit significant variations in their usage and perception among various domestic, regional and international jurisdictions. With the current competition on legal traditions it is important to note that these great codes do not necessarily replicate their formation on the base of their respective national courts nor do they include the legal traditions relating to international commercial arbitration. However, international commercial arbitration should not at any time be perceived as entirely rooted in the common or civil law traditions. This perception may paint a picture of dominance by the elite cadre of lawyers who may be seen as hijackers of its operation so as to imbed fixed skewed concepts into the arbitration law. Such perceptions should be carefully considered and avoided for they can adversely influence attitudes of potential users of international commercial arbitration to result to alternative ways to resolve their commercial disputes (Hudson, 1943).

Various principles can be applied to measure the legal tradition of international commercial arbitration and make an informed decision on how best parties can be unified towards taking advantage of international commercial arbitration. In the first principle the parties have the freedom to choose the form, nature and modes of operation of arbitration. The parties decide on whether the arbitration will take the ad hoc nature or it shall be institutionalized, the arbitration form is chosen among the European, American or any other known legal traditions. In addition the parties have the freedom to choose on whether the arbitration will be basically through oral or written witnessing and whether it would be based on a multi – treaty, bilateral treaty or existing customary laws. The arbitration parties can decide to make their own choice so as to selectively get the leading internationally recognized commercial experts who may not be available locally. The international commercial arbitration is in most cases affordable to parties, efficient and its proceeding are always specifically tailored to meet the parties’ requirements. Finally the parties might choose the international commercial arbitration in avoidance of relying entirely on the rules, laws and procedures of a single legal system that would be dominated by courts of one party (Wetter, 1979).

In the second principle, parties make choices that would encompass their favorable legal tradition, without opting for domestic courts. For example, the parties can decide to take an arbitration model like that of the ICC which is international and has the advantage of other models in that it is not based on any procedures followed by the local courts.

In the third principle the arbitration is done in such a way that it reflects a specific legal tradition and in general terms the preferred cultural orientation. The ICC court for example, determines the form, authority as well as the content of every ICC award. This shows a culture in which consistency, uniformity and authority is effectively exercised. With ICC being an international institution these legal traditions can be conceived as international as well. However, ICC has in its operations legal traditions that encompass important civil law values as well as widely acceptable and renowned approach in law enforcement and professional ways and means of making of arbitration procedures. (Welmer, 2003).

In the fourth principle the specific methods that relate to international commercial arbitration is more pronounced whenever they are done on a particular legal tradition. In the fifth principle the variations on the services rendered by the international commercial arbitration is effected by the clients who are the business community.

The success factors of the international commercial arbitration sometimes serve as its main challenges. For example, the significant principle through which the national courts recognize and issue arbitral awards which is considered as an excellent solution to the vagaries of forum shopping, is highly discredited when such awards chosen in a particular national jurisdiction are seen to be enforced in another. Nevertheless, international commercial arbitration’s legal traditions still enjoys enormous stability and has maintained a reputable public image through such important tribunals as the permanent court of arbitration. International commercial arbitration has considerably benefited from the authority accorded by the New York convention of arbitration awards on the recognition of its efforts in implementation of foreign arbitration awards. The legal traditions of the international commercial arbitration has been borrowed and assimilated to the changed market forces, especially through modification of arbitration services to business communities (Wehberg, 1913).

Adaptation of the International Arbitration to the modern states

Various studies to the rules of arbitration in different local, regional and international organizations indicates that commercial arbitration possesses characteristics of pervasive legal traditions but the procedures in which those traditions are expressed differ from one arbitration organization to another. Exposure of these wide ranges of effective services from diverse arbitration organizations is the true source of the rules on arbitration that adoptable through out other local jurisdictions. These inconsistence in the global arbitral practices should however not be taken to imply or reflect a sham in the legal traditions within the international commercial arbitration. The existence of these differences can be understood though debatable and it would be wrong to think that such variations in the procedures and rules of the international arbitration process can be fully eliminated.

Recognition and enforcement of foreign arbitral awards

In recent times parties voluntarily execute arbitral awards, for example reports show that over 90% of all ICC arbitral awards were executed voluntarily by parties. There are various reasons for this but most significant is the fact that business communities do not want to put their reputations at risk by failing to comply with the resolutions of arbitral tribunal that they have agreement upon on voluntary basis. Arbitration bodies such as the ICC require the parties to execute the arbitral awards in good time. This requirement has motivated the parties to work fast a fact that has enhanced spontaneous enforcement of the award. However this does not mean that the arbitral awards are regarded as a waiver of all recourses in all jurisdictions, some court orders have supported the concept that such a waiver be treated as the parties’ binding agreement to put to an end the arbitration with the resolution of the arbitration panel. In cases where the award debtor does not comply with the award on voluntary basis, the court can intervene in many law jurisdictions once the award is finalized. Usually the national courts can be allowed to adopt two procedures in their intervention efforts that is the setting aside procedure and the enforcement procedure. The award debtor can request for the setting aside of the award before a competent national court. The national court can however only deal with domestic awards. An award qualifies as foreign if it is made in a territory of a different state or if it is not considered as a domestic award in the State where one seeks it to be recognized and enforced. In most nations domestic and foreign awards are enforced through different procedures and therefore the proper separation of the two is important. The enforcement of an award can be rejected in one state but be accepted in another due to the difference in the approaches by various national legal systems (Wang, William 2003).

A proposal on the concept of delocalizing arbitral proceedings has been made to avoid problems related to the difference in the approaches of national arbitration. The proposal provides for the proceedings to be delocalized through the express choice of the parties based on the arbitration governing rules on the particular proceedings, the arbitration agreement or be based on the substance of the dispute. It also provides for an express choice by the parties to exclude any form of interference or supervision of the national courts concerning the arbitration proceeding. In cases where no legal system expressly associates that arbitration proceeding as domestic, then it is not possible to assign it to any specific legal system (Lillich, 1994).

To obtain recognition and enforcement of a foreign arbitral award it is mandatory that the applicant supplies authentic prove of the award and the agreement between the parties in the official language of the country in which the application is made. The application may be refused either by being invoked by the parties to protect the interests of the award debtor or by the court to protect interests of the forum country (Wagoner, 1999).

The Pillars of the International Arbitration

International commercial arbitration has originated basically from the two closely related and unified international traditions that is the private international legal traditions that is generally geared towards ensuring homogeneity of laws, and the public international law traditions that is geared towards ensuring that there are no illogical barriers to international trade, and to shield national interests of the young economies. Despite the division of global trade along regional and bilateral paths, international commercial arbitration has retained its significance instrument in the world trade. Many States have now adopted the New York convention and even though studies shows that minority of international arbitration awards are not fully executed, the rate of successful adoption is encouraging considering the state of the bilaterally focused global community (Taylor, 2002).

Owing to the fluid nature of the political, economic and social environment, the parties that seek to have the services of the international arbitration should do so from a wide range of available options that defines the time, place and methods to be employed in the arbitration proceedings relating to their disputes. The choice of arbitration means can be based on the renowned stability of the preferred arbitral systems and records of their successful history of the concluded and already enforced past arbitrations cases. In addition parties can make a choice from the available regional and national arbitration centers that encompass diverse legal traditions and give different responses to disparate legal cultures. Depending on their needs the parties can duly adopt certain relevant arbitration clauses. Due to the variations of the law jurisdictions cultural changes are increasingly taking a center stage in the way and manner that the international arbitration services are being conducted. (Wagoner, 1999).

International commercial arbitration has recently joined the global culture of technology in conduction of its services over the internet. A number of international and regional arbitration organizations have introduced specialized internet services such as domain name search and the related dispute resolution which has significantly improved on the time taken to offer satisfactory services. The major local centers, regional and international arbitration organizations are also offering specialized internet services such online case filing with full pass protection using advanced gateway services. With the majority of global communities becoming more and more reliant to the internet, such inclusions in the international arbitration services is highly welcome. Studies are showing that those infamous arbitration centers that were once regarded with suspicion by the business communities are improving and have become more competitive and ready to offer high quality and transparent services. For example negative perceptions towards China’s International Economic and Trade Arbitration Commission (CEITAC) has since changed as it developed modern procedures and rules to encompass interests and needs of the larger global business communities.

In addition centers that basically provide arbitration education have developed further to acquire the ability to help parties to make decisions on how to draft arbitration clauses, choose effective arbitrators and how to build realistic objectives, budgets and timelines in arbitrating disputes. While it might be difficult for parties to comprehend the complex nature and cost of arbitration, it is always important that arbitration process not be perceived as expensive or as complex especially by the potential end users of the service. Arbitration bodies are working to eliminate these barriers, for example, most of the regional arbitration organizations have offered to deliver low cost and much speedier arbitration services. To execute this they have introduced internet services that has considerably cut down on the arbitration procedures through use of local and regional arbitrators who are always readily available and by working together with other established international arbitration to meet their common objectives. Localization and regionalization of arbitration processes as seen today is a sign and evidence of the natural reaction to the emerging new opportunities and is also part and parcel of the upcoming changes in the culture of the international commercial arbitration (Karrer, 2008).

Global culture of arbitrational inclusion

Cultural myopia is a significant global problem facing international commercial arbitration. The problem is primarily originates from the failure of the respective institutions to properly and effectively encompass the changing national legal traditions and cultures that have major variations from their own. For example the current incantation of the international commercial arbitration in Africa suffers inadequacy in serving most African environments. The legal traditions embedded in the African legal systems were derived from the colonial rubric of Civil and common law traditions. Modern international commercial arbitration’s maturity was witnessed in the second half of the twentieth century in the major towns of America and Europe. Both Africa and Asia could not participate actively in this evolution as they lacked big cosmopolitan commercial towns where dispute resolution could be directed. Moreover, basic values of international commercial process could not be amicably exercised in African jurisdictions as procedures take long to be executed and there is difficulties to access facilities as opposed to cosmopolitan centers where all requirements in the arbitral process is easily accessible. A number of African towns are still perceived as unsuitable for arbitration centers and the communication lines within Africa is considered as slow and prone to disruptions. Internationally recognized commercial lawyers practicing as arbitrators or counsels are also rare in Africa (Cotran, et al 1996).

However, Africa is still part of the international community with its political power as enshrined in its voting strength in regional and international trade associations. Africa also has economic significant, inter alia, especially in the importation of manufactured goods as well as exportation of agricultural commodities. Though African business is just but a small fraction of the business of the international commercial arbitration it is paramount to ensure that it is accommodated within the arbitration system. It can be remembered of Asia a few years ago when the international business communities regarded it as inconsequential but today Asia and especially China and India occupies a decisive position in determining the direction of the international market trends and consequently playing important role in international dispute resolution. Therefore international commercial arbitration must be steady to ensure that they are not regarded as culturally myopic when important changes suddenly beckon. Ignoring customs and legal traditions in developing jurisdiction can be a great setback to international commercial arbitration, for this reason this very spirit of inclusion in arbitration rules and processes must encompass all other developing regions including Middle East and South America. The international arbitrators must demonstrate their full ability to encompass cultural changes while at the same time working in accordance with the prescribed law for wherever power is delegated responsibility is demanded (Kee, 2006).

Conclusion

International commercial arbitration has sometimes fallen short of its central mandate of arbitration especially in providing timely and affordable alternatives to national courts of law. The fluid and complex nature of the legal cultures governing international commercial arbitration and arbitral institutions has sometimes made it difficult to quickly adapt to the ever rising demands of changing markets for their important services. The legal cultures and traditions that were historically ignored need to be given priority and incorporated in the main rules and procedures of the international commercial arbitration. This is because the weight of these cultures is increasing each day in terms of the number of potential clientele, the economic strength of the ignored business communities and political good will (Shalakany, 2000).

However the international commercial arbitration has registered significant progress in demystifying arbitration among various associations and institutions at international, regional and local levels. Educational information on arbitration is now easily accessible and parties including in the online facilities and parties now comprehend better on the operations of arbitration and awards. Online databases give detailed answers to frequently asked questions and attempts to clarify arbitration requirements in terms of national legal procedures for award enforcement, time and cost involved in commercial arbitration processes and general conventions on international commercial arbitration (Sultan, 1959).

It is however notable that amidst all this development in international commercial arbitration it might be very unlikely to offer all solutions in dispute resolutions in the vast global community. The greatest threat to this dream is the continued perception that arbitration is usually not sensitive to the basic interests of important potential end users. This threat needs amicable solution in a creative and decisive manner to give assurance for the thriving of international commercial arbitration (Cotran, et al 1996).

Finally, seeing that arbitrators are private individuals national jurisdiction courts need to play a more participatory role in the recognition and enforcement of arbitral awards. Adoption of uniform rules in the recognition and enforcement of these arbitral awards needs to be emphasized more for it has impacted significantly on the general arbitration practice and the court practices with relation to arbitration itself. With this, the guide to National rules of procedure for recognition and enforcement of New York convention awards shall successfully fulfill its mandate in facilitation of the recognition and enforcement of foreign awards and help raise the countries membership to the convention (Cory, et al 1932).

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Reception and Enforcement of International Arbitration Orders and Awards
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