LLB103 Lecture Notes - Lecture 7: London Court, Arbitration Act 1996, Gary Born
LLB103 DISPUTE RESOLUTION LECTURE 7: INTERNATIONAL COMMERCIAL ARBITRATION
1. AN INTRODUCTION TO INTERNATIONAL COMMERCIAL ARBITRATION
1.1. A definition
a.a. ARBITRATION
Arbitration is ‘a process by which parties consensually submit a dispute to a non-
governmental decision maker, selected by or for the parties, to render a binding
decision resolving a dispute in accordance with neutral, adjudicatory procedures
affording each party an opportunity to present its case’.
ELEMENTS:
●Consent: arbitration is based on the consent of the parties to arbitrate; it is the
consent that gives the tribunal jurisdiction to determine the dispute between
the parties as well as authority to render an award that binds the party; if there
is no consent to arbitrate, there can be no arbitration. It is usually in the form of
an arbitration agreement; vastly different to litigation where people are compelled to
participate or risk judgement being entered against them in the court.
●Involvement of independent, non-governmental decision makers selected by
the parties: an individual is referred to as an arbitrator, however, if there is more than
one, they are referred to as the tribunal. They’re selected by the parties or
alternatively, an arbitral institution in accordance with the directions of the parties.
Sometimes the tribunal can be chosen by a combination of both approaches.
However, if the parties don’t reach an agreement in regards to how the arbitrators are
chosen, then a court can identify the arbitrators for them; very unusual. It is called
ALTERNATIVE DISPUTE RESOLUTION because the third party is a non-
governmental decision maker; disputes aren’t resolved by the courts. The judiciary of
state are considered to be governmental decision makers for the reason that they are
paid by the state. In an arbitration, the dispute is resolved by the arbitrators.
●final and binding on the parties: if you don’t agree with the final outcome, you
cannot then appeal to a court and have your dispute resolved again. By agreeing to
arbitrate, you are agreeing to the tribunal to resolve the dispute between you.
So, why arbitrate? Many would rather have their disputes resolved by experts in the
area rather than experts in law. Moreover, arbitral awards are more easily enforced
than international judgements because of the New York Convention.
It is final and binding and this is what differs it from mediation and negotiation.
●adjudicatory process: the arbitrator hears the facts, applies the law and reaches a
decision that is final and binding upon the parties. The decision is called the ‘arbitral
award’. The legal framework of international commercial arbitration almost never
allows an appeal of an arbitral award on the merits; it is final in the sense that it is the
end of the matter.
However, there are some exceptions. The UK Arbitral Law allows some appeals on
the merits of the award but is generally where the parties have chosen that the law
find more resources at oneclass.com
find more resources at oneclass.com
that will apply is from England or Wales; substantive law. This process is very rarely
taken up and when it is taken up, it is very rarely successful.
Born insists that these elements are international commercial arbitration.
b. International
UNCITRAL Model Law only applies to International Commercial Arbitration Article
1(3).
Explains when the arbitrations are international; where the parties to the arbitration
agreement have their places of business in different states or if they agree that the
subject matter of the arbitration relates to more than one state. Even if their places of
business are in same state, it can still be international if the parties agree if the seat of
arbitration is a state outside where the parties have their places of business.
State in this context means a nation state not a state like QLD or NSW; Australia is a
nation state.
For example, there is a buyer who has its place of business in Singapore and a seller
who has its place in New Zealand. Their contract for the sale of goods includes a
contract for the sale agreement that stipulates that the place or seat of arbitration will
be Australia. The contract requires that the goods will be delivered by a distribution
agent by Australia. This is an international contract for the sale of goods. A dispute
that may arise in this contract would be international for 2 reasons: 1) the buyer and
seller have their respective places of business in two states and 2) the buyer and
seller have agreed that the state of which they have agreed is a state other than the
place of which their businesses are located.
c. Commercial
UNCITRAL Model Law on International Commercial Arbitration Article 1(1).
The arbitration has to be commercial in order to trigger the application of the
UNCITRAL Model Law on International Commercial Arbitration; it is a critical part of
the framework. Will only apply in accordance with Article 1(1) if the arbitration is
commercial.
The term “commercial” should be given a wide interpretation so as to cover matters
arising from all relationships of a commercial nature, whether contractual or not.
Relationships of a commercial nature include, but are not limited to, the following
transactions: any trade transaction for the supply or exchange of goods or services;
distribution agreement; commercial representation or agency; factoring; leasing;
construction of works; consulting; engineering; licensing; investment; financing;
banking; insurance; exploitation agreement or concession; joint venture and other
forms of industrial or business cooperation; carriage of goods or passengers by air,
sea, rail or road.
1.2. Why is International Commerce important?
UNCITRAL specialises in the modernisation and harmonisation of international business and
find more resources at oneclass.com
find more resources at oneclass.com
commercial law to foster increased opportunities for international trade. International trade
leads to economic growth, higher living standards for all and increased opportunities for
respect and harmony that contribute to world peace. UNCITRAL is the legal body of the United
Nations and consists of 8 different working groups.
Simply put, it specialises in creating modern and harmonious trade law to encourage trade
among nation states. In particular, in harmonising and modernising trade law, it hopes that
developing nations will engage in trade with more developed nations. In doing so, they'll
become increasingly less reliant on foreign aid. More international trade will lead to more
economic growth and thus, a higher standard of living for everyone on the planet. Increasing
opportunities for trade will therefore, increase opportunities for respect and harmony which
ultimately contributes to world peace.
1.3. Arbitration is the preferred dispute resolution mechanism in international
commercial disputes. Why?
○Neutrality
○Centralised decisions on jurisdiction and choice of law
○Enforceability
○Expertise of decision makers
○Finality of the award
○Flexibility of procedure – including confidentiality
1.4. What is Party Autonomy?
The doctrine of party autonomy supports the freedom of the parties to agree as to how
disputes arising between them should be resolved.
○choose arbitration
○substantive law
○arbitral law
○procedure
1.5. The New York Convention
The pro-enforcement (defined as: international and state laws work together to ensure that
arbitration agreements and arbitral awards and enforced). The regime of the New York
Convention is one of the most highly valued attributes of international commercial arbitration .
EXAMPLE:
●A Chinese v Australian company in a dispute.
●The Chinese company is successful, however, the Australia company refuses to pay the
award.
●The assets of the unsuccessful party need to be considered. In this theoretical scenario,
Australia and Singapore.
●The location of where the award (if it was arbitrated)/judgment (if it was litigated) was made
also needs to be considered. In this case, China.
IF THE MATTER WAS ARBITRATED
Enforcement in Australia – Chinese Arbitral Award
●New York Convention – Australian courts are obligated to recognise and enforce foreign
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Llb103 dispute resolution lecture 7: international commercial arbitration. It is usually in the form of an arbitration agreement; vastly different to litigation where people are compelled to participate or risk judgement being entered against them in the court. Involvement of independent, non-governmental decision makers selected by the parties: an individual is referred to as an arbitrator, however, if there is more than one, they are referred to as the tribunal. They"re selected by the parties or alternatively, an arbitral institution in accordance with the directions of the parties. Sometimes the tribunal can be chosen by a combination of both approaches. However, if the parties don"t reach an agreement in regards to how the arbitrators are chosen, then a court can identify the arbitrators for them; very unusual. Alternative dispute resolution because the third party is a non- governmental decision maker; disputes aren"t resolved by the courts.
