This article is written by Bhumi Agarwal who is pursuing a Diploma in Advanced Contract Drafting, Negotiation and Dispute Resolution from LawSikho.
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International Arbitration is a method of settling disputes between parties worldwide without going through any courtroom proceedings. International Arbitration is a form of ADR which apart from arbitration includes various other methods of settlement between the disputed parties like mediation, negotiation, conciliation, dispute review boards, and expert determination, etc. This article aims at letting the readers get aware of International Arbitration and how this International Arbitration has benefited the various countries of Asia to settle commercial disputes.
This method of arbitration although does not cost less but provides a speedy trial without any leakage of information to the third party. It is a better way of settlement as international arbitration tribunals consist of arbitrators from a different nationality, which helps to provide a neutral decision for any dispute. It is completely left on the arbitrators to decide the procedure to be followed and the merits of the disputes. It can offer dispute resolution in a neutral form.
So, it’s better to adopt arbitral proceedings for settling disputes which have a neutral place and language with expert arbitrators applying international arbitral rules such as ICC Rules of Arbitration or the UNCITRAL Model Law on International Commercial Arbitration as a fightback to the submission of jurisdiction to the national courts of the other disputing party.
It is therefore widely admitted or infact esteemed that the biggest advantage of the international arbitration are the arbitral awards, which are enforceable neutrally and readily than the litigation judgement. The 1958 New York Convention backs this on the Recognition and Enforcement of Foreign Arbitral Awards, which provides for the due international recognition and enforcement of foreign arbitral awards in over 120 countries worldwide, subject to very limited defenses set out in the New York Convention.
International Commercial Arbitration in Asia
In the past few years, Asia has come up with a large number of such International Arbitration Institutions for the settlement of commercial disputes. In the past few the number of cases of arbitration has reached to around 3000 among which 40% of such cases are registered in Asian countries. Among these Hong Kong, Malaysia, Japan have the most effective and leading Centre’s of International Commercial Arbitration in Asia.
Some of Asia’s International Commercial Arbitration Institutions are as follows:
- Mongolian International Court of Arbitration (“MICA”);
- Japan Commercial Arbitration Association (“JCAA”);
- China International Economic and Trade Arbitration Commission (“CIETAC”);
- Hong Kong International Arbitration Centre (“HKIAC”);
- Korean Commercial Arbitration Board (“KCAB”);
- Philippine Dispute Resolution Centre (“PDRC”);
- Thai Arbitration Institute (“TAI”);
- Singapore International Arbitration Centre (“SIAC”);
- Kuala Lumpur Regional Arbitration Centre for Arbitration (“KLRCA”);
- Badan Arbitrasi Nasional Indonesia (“BANI”) in Indonesia;
Although, these institutions are advantageous for settling commercial disputes but in Asia, there are various institutions, which are formed with the help of local government and so, are somewhat biased in matters relating to their local disputed parties and the other nation’s party. There are cases when the parties are to choose the arbitrators from the given list of arbitrators, which is formulated by the government. So, apart from being beneficial in some rare cases where the local government backs up the foundation of International Institutions’ biased form of settlement can be observed.
Scope of International Commercial Arbitration in various countries of Asia
- Japan: Till 1960, Japan was not that much into Arbitration for settling disputes but on June 2, 1961, Japan for the first time became the party to a convention on recognition and enforcement of Arbitral Awards. This convention was named the New York Convention. Japan for the 1st time entered into a convention and followed the rules as per the provisions of JAA. The JAA was completely based on the UNCITRAL Model Law and was a complete reflection of it.
Although, JAA is based on the rules of UNCITRAL Model Law it has several provisions in addition to the UNCITRAL Model Law. Such provisions are related to the authority of the courts regarding arbitration-related matters, the power to transfer the cases by the courts related to arbitration, and also regarding the procedures for appeal in matters of arbitration. In JAA makes it crystalline that the settlement of disputes through arbitration is completely different from the court proceedings. Both the parties should provide their mutual consent for the process of adoption of International Commercial Arbitration; judge cannot initiate the proceeding on his behalf without the consent or approach of the disputed parties.
As per Article 13 of JAA, all the civil disputes that may be resolved by the settlement between the disputed parties except for the cases related to divorce and separation; comes under the definition of Arbitral cases. As per the provisions of JAA the jurisdiction to deal with the arbitral cases are with:
- District court designated by the parties to the dispute; or
- District court having authority over the place of arbitration; or
- The district court having the personal jurisdiction over the counterparty case.
Now if we talk about the procedure the JAA provides that the date on which the party sends a notice to the other party to the dispute regarding the dispute of arbitration that day will be considered as the date of commencement of Arbitral proceedings. Whereas as per JCAA Rules, the date on which the written request regarding the dispute is received by the JCAA will be considered as the date if commencement of the dispute. There exists various other differences in the Arbitration proceedings of JAA and JCAA refer to the context of admissibility of evidences, place of arbitration proceedings, summon of witnesses, arbitration experts and the privacy of the matter.
The disputed parties decide the number of arbitrators in an agreement and if in case no such agreement exists then as per the rules of UNCITRAL Model Law. As per the provisions of JAA, the arbitral tribunals have the authority to convey orders related to interim relief which would prevent the parties from status quo. i.e. any action which may render harm to the other party. According to Article 15 of JAA, it has been held that nothing in the Article 14 can prevent the party to file a petition for the measures of interim relief in the court before or during the arbitration proceeding is going on in the Arbitral tribunal regarding arbitration agreement.
The Arbitral award is received in writing and with the signature of the arbitrators deciding the award. If in case, there are no. of arbitrators and due to any reason any of them does not signs it then the award must be signed by the maximum arbitrators to be a valid one. Also, there should be mention of proper reasonable grounds, which favor the award, and if any other criticism by any of the arbitrators regarding the award arises, then that also has to be mentioned in that. In JCAA there is also mention of the time limit for the providence of the award, which is nine months whereas no such time binding exists in JAA.
Korea: Korea in the past few decades have experienced a great upswing and assortment in cross-border trade and business. With the upsurge of trade multiple nationalities are connecting to Korea for the purpose of trade and commerce, which also becomes the cause of increase in disputes regarding commerce between the parties. In 2017, Korea ranked ninth, the second-highest in Asia after China, in terms of the nationalities of parties involved in the arbitration cases filed with the International Chamber of Commerce (ICC). The only statutorily authorized arbitral institution in Korea is The Korean Commercial Arbitration Board (KCAB).
In 2017, the KCAB received a total of 385 requests for arbitration, 78 of which were international cases. The total number of cases in 2017 was up approximately 20 per cent from 316 in 2010 while the number of international cases has shown a sharper 50 per cent increase from 52 in 2010. Korea has a very friendly attitude in relation to the Arbitration. It has also launched the legislative support for its arbitration sector. In 2016, an Amendment in the original Korean Arbitration Act led to the incorporation of UNCITRAL Model Law Rule. This amendment in the Korean Act brought about several additions to the previous act. These changes were related to the following aspects:
- Expansion and Illumination of subject matters related to Arbitration. The previous Act dealt only with the disputes related to private laws but the amendment expanded its application to both private as well as public laws.
- The Amendment to the Korean Arbitration Act also diversified the view regarding the written arbitral agreement. The Amended Act overrides the narrow scope of ‘written’ arbitral agreement and widened its scope by including the terms of agreement made orally, electronically or by any of the means within the Arbitration written agreement’s definition.
- The Amended Act also made specifications to the interim measures under the Korean Arbitration Act.
- The Amended KAA also made changes to the recognition and enforcement of Arbitral awards. Earlier, the court ‘judgement’ could render the arbitral award but now it only requires the court ‘order’ which had made is much easier.
- The amendment has also given the permission to the disputed parties to become a part of examination the evidences conduct before the court with the permission of the judge. Also, the amendment gave power to the arbitral tribunals to impose penalty interest .
So, this amendment of 2016 strengthens the laws for the settlement of disputes through arbitration and made Korea stronger in relation to Arbitral legislation.
Malaysia: Malaysia in the year 1952, enacted an Arbitration Act for the settlement of disputes through arbitration. In 1960, an amendment was made to the Arbitration Act of 1952. Prior to this amendment, the Act had a common rules for both domestic and International Arbitration but post amendment a special and parted rule for International Arbitration was made and these International Arbitral matters were conducted before the Kuala Lumpur Regional Centre for Arbitration.
Foreign awards can also be enforced by way of summary enforcement or by the New York Convention, which was enacted in Malaysia in 1985. Recognition and enforcement of foreign arbitral awards can be taken pursuant to the provisions of the New York Convention. As per the provisions of the New York Convention if in case the arbitral awards is made in any other language then, it has to be converted into the national language or English language and to be asserted by the sworn translator or consular agent. In the event the foreign award is made in a country which is not signatory to the New York Convention, then the manner to register and enforce the award in Malaysia would be by way of a fresh action for breach of the terms of the award.
Case: Para Shipping Ltd v MPC Holding Sdn Bhd (1984) CLJ 248.
In the above case, it was held that as the dispute arouse between the parties before the enactment of the New York Convention and the award was also made prior to its enactment so it is valid and logical that the procedure would likewise be available for the cases where the arbitral award was made by the country which is not a signatory to the New York Convention.
This article has made it clear that Asia has been really doing well for promotion, advancement and enforcement of International Arbitration. There are many Asian countries that contributed immensely in International Arbitration. Arbitration Acts of these countries have led a proper regime for settlement of disputes cross borders in matters relating to trade and commerce. Various Amendments which come regularly with the changing society and corporate needs provides more strength to these provisions of the Arbitration Act.
Asia has many countries, which have established number of International Arbitration Institutions, which help in quick and easy settlement between the disputed parties. Several Asian countries like Japan, China, Korea, Malaysia, Hong Kong have contributed at a large scale in making Asia a great International Arbitration Hub. It is believed that this trend will go decades long and will also contribute to spread of commerce in Asia at a very huge level. Finally, a comparative review of recent trends in arbitration legislation reform throughout Asia epitomizes the salutary effects of the ambitious mission and work of the ICC and UNCITRAL respectively in promoting the harmonization of international arbitration law and the practice within Asia.
However, as we can observe from the implementation of the New York Convention in various Asia case studies hereinabove, embracing international arbitration rules and principles and attempting to uniformly enforce them in very diverse sociopolitical and cultural surroundings present significant challenges. To conclude, I would say that Asia may face great challenges in the coming future and so it should strength itself accordingly to face such challenges with the best of Arbitration Regimes in the World.
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