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Zh.S.Yelyubayev Ж.С.Елюбаев
Advantages аnd Deficiencies Of Arbitration As Compared At present stage of development of the human society, the process of economic integration is the main direction of international policy of most states. Integration gains a special strength in Western and Eastern Europe and the CIS.
Cooperation between economic unions, major transnational corporations and business entities is becoming the main factor of international relations and often causes the conflict of interests. In light of this, an efficient and just settlement of economic disputes in accordance with the principles and norms of international law and existing international arbitration practices is the main condition for strengthening and development of international economic cooperation.
Choosing among the means of settlement of economic disputes and the differences of other nature between the subjects of economic relations, parties should take into account their adequacy, efficiency and fairness. The variety of existing means of dispute resolution not in the least ensure that they all, without exception, can be efficiently used for settlement of economic disputes.
However, nobody doubts that international commercial arbitration is the main means of settlement of disputes that arise in the sphere of international trade. The interest to the arbitration as the means of settlement of differences out of the framework of the state courts is not accidental. The problems of the state judicial system, including the shortage of budget funds, excessive number of cases considered by courts, bureaucracy and red tape, political motivation of courts and, in some cases, corruption, make parties look for more speedy and efficient ways of conflict resolution.
Modern international commercial arbitration exists, basically, in three forms[1]:
a) permanent arbitration courts, usually created by commercial and professional organizations, which act in accordance with the rules adopted by these organizations; b) ad hoc arbitrations courts, created by parties for settlement of a specific dispute, which act in accordance with the rules approved by the parties themselves; c) administrated arbitrations courts, which hold an intermediate position between permanent arbitration courts and ad hoc arbitration courts.
Popularity of arbitration, as well as its recognition by official government bodies, not only caused the development of a set of regulations on the international level, but also promoted the adoption of national legislative acts governing this issue.
Attractiveness nongovernmental arbitration is based on the following factors:
a) independence and impartiality of the arbitration court, ensured by the arbitrator election (appointment) procedure; b) high professional qualification of arbitrators, because the parties themselves elect (appoint) arbitrators from among the competent people; c) possibility of determination by parties of the scope of competence and procedure for consideration of the dispute, wider opportunities for applying the principles of justice, confidentiality and quickness of the dispute settlement; d) the atmosphere of cooperation, because the arbitration facilitates the achievement by parties of a mutually acceptable conciliation, i.e. conclusion of an amicable agreement and retaining the spirit of confidence and cooperation for future; e) finality of arbitration awards, when no other body is entitled to revise the original arbitration award; f) binding nature of the arbitration awards for parties and the guarantee, in most cases, of enforcement if parties evade a voluntary compliance (on the basis of the provisions of the New York Convention of 1958, for example); g) closed nature of consideration of disputes, because the arbitral proceedings are held in the absence of third parties, which helps to preserve the image and business reputation of the parties.
Having noted the advantages of the arbitration, one may not ignore some of its shortcomings as compared with other ways of dispute resolution, for example, settlement through the state courts.
First of all, the arbitration is deprived of the attributes of the state authority and cannot, on its behalf, enforce the witness summons, request the state bodies or third parties’ documents, materials, opinions, levy distress to secure the claims of the party that commenced the arbitral proceedings. Besides, the arbitration authority to bring co-claimants and co-respondents, replace improper claimants or respondents by proper ones can be limited by the arbitration clause.
Furthermore, having agreed to the arbitration, parties, as a rule, undertake to carry out the award without delay and irrevocably waive their right to any form of recourse. In some cases, the rules of arbitration selected by the parties, the Rules of London Arbitration Court, for example, (Article 26.9), provide that all awards shall be final and binding on the parties. In certain cases, however, appealing against some action of arbitrators or even awards within the system of the arbitration court is allowable. For instance, Article 31 of UNCITRAL Rules allows appealing against and therefore revision by the panel of arbitrators of a personal decision of the Chairman on procedural issues. Article 52 of the Washington Convention contains a special provision allowing each party to a dispute to request the cancellation of award for a number of procedural and material reasons, which include exceeding of the authorities by the arbitration, insufficient substantiation of the award made and even subornation of one of the arbitrators.
Efficiency of legal defense in general and of the arbitration practice in particular depends a lot on the final stage of the legal procedure, enforcement of awards. Arbitral proceedings are ended by an award, which, as a rule, cannot be appealed against and which is legally binding on the parties involved in the dispute. Generally speaking, awards should be voluntarily carried out by parties. At practice, however, it is not infrequently that the arbitral awards are not carried out voluntarily, and then the enforcement becomes necessary. All key issues of enforcement of foreign arbitral awards are regulated by well known international conventions and Agreements (for example, New York Convention of 1958, European Convention of 1961, Kiev Agreements of 1992 for CIS countries). These international acts provide that foreign arbitral awards should be enforced by judicial bodies of the country of residence of the respondents.
However, the New York Convention (Chapter V), for example, provides for the cases when foreign arbitral awards are not enforced at the request of the responding party, provided that this party has submitted the evidence that, for example, the parties to the arbitration agreement were not fully competent or the agreement was not valid under the applicable law. There are also some other grounds for that.
An arbitral award may also be not enforceable if the competent authorities of the relevant country found that:
a) the object of the dispute can not be a subject of arbitration under the law of this country; b) the enforcement of this award would contradict public order of this country.
Thus, there is a threat that the arbitral award will not be enforced. Such a threat is especially high in the CIS. For example, in the judicial practice of the Republic of Kazakhstan, the state courts, where the claimants apply for the arbitral award enforcement writs, have a clear tendency to verify the appropriateness of awards on the merits. Such a practice is not based on the law and goes beyond the scope of competence of state courts.
Nevertheless, despite these flaws, arbitration is the most democratic, efficient and prompt means of dispute resolution.
[1] This classification offered in «Baker and McKenzie: International Commercial Arbitration. States of the Central and Eastern Europe and the CIS».
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