INTERNATIONAL

COMMERCIAL
ARBITRATION
LIST OF ABBREVIATIONS
 ADR Alternative Dispute Resolution
 AJD Admiralty Jurisdiction Decree
 FHC Federal High Court
 ICC International Chamber of Commerce
 ICJ International Court of Justice
 ICSID International Centre for Settlement of
Investment Disputes
 ILM International Legal Materials
 LFN Laws of the Federation of Nigeria
 NWLR Nigerian Weekly Law Reports
 SI Statutory Instrument
 UNCITRAL United Nations Commission on
International Trade Law
 WTO World Trade Organisation
EMERGING AND CURRENT TRENDS IN
INTERNATIONAL DISPUTE SETTLEMENT
Parties to international business transactions are
free to select and build the terms of their
contract as long as they keep within specified
boundaries of legality and mandatory rules.
The flexibility created thus extends to the
settlement of disputes and ensures that
parties can resort to a host of methods to
resolve their differences, exclusively or at the
same time concurrently. These methods
include:
a) Litigation
b) b) Arbitration
c) c) Mediation/ADR 15
Litigation
This is a civil matter brought before courts of law.
At the international level, disputing states may
bring matters before the International Court of
Justice of the United Nations where both states
have consented to the court’s jurisdiction. In the
national courts however, a party may bring an
action whether or not the other consents so
long as the court has the necessary personal
and subject matter jurisdiction over the dispute.
However, the right to resort to a court may in
some instances be premised on resort to other
forms of dispute settlement that have been
compulsorily stipulated by the contract. These
pre- litigation forms of dispute resolution can
include negotiation and mediation.
Arbitration
The parties may agree at the time of the contract,
or at any stage before or after the dispute has
arisen, to arbitrate their disputes. The parties
may draft their own rules for an ad- hoc
arbitration, but this may prove troublesome
especially after the dispute has arisen. And,
generally such rules are not deemed a priority
at the time of the making of the contract when
parties generally consider disputes as a remote
possibility. As an alternative, the parties may
choose from a plethora of predetermined rules
offered by the various arbitration institutions
around the world.
Mediation/ADR 15
This form of dispute settlement is not in any way
new to international business transactions.
Mediation is as old as the legal system itself
and has always existed in all peoples and races
through time. The role it currently plays is
somewhat muted although this may yet gain
more prominence. The reason for this
conclusion is based on its success rate
compared to arbitration and litigation and the
fact that it is cheaper, faster and more private
than either litigation or arbitration.
International arbitration
Established method today for resolving disputes
between parties to international commercial
agreements. The practice of international
arbitration has developed so as to allow parties
from different legal and cultural backgrounds to
resolve their disputes, generally without the
formalities of their underlying legal systems.
One of the distinguishing characteristics of
international arbitration is that it is not tied to a
particular legal procedure or practice, unless
the parties desire it to be so.
International Commercial Arbitration
” means an arbitration relating to disputes arising
out of legal relationships, whether contractual or
not, considered as commercial under the law in
force in India and where at least one of the
parties is—
 An individual who is a national of, or habitually
resident in, any country other than India; or
 A body corporate which is incorporated in any
country other than India; or
 a company or an association or a body of
individuals whose central management and
control is exercised in any country other than
India; or
 the Government of a foreign country;
The resolution of disputes under international commercial
contracts is widely conducted under the auspices of
several major international institutions and rule making
bodies. The most significant are the
International Chamber of Commerce (ICC), the
International Centre for Dispute Resolution (ICDR), the
international branch of the
American Arbitration Association), the
London Court of International Arbitration (LCIA), and the
Singapore International Arbitration Centre (SIAC). The
Indian Arbitration and Conciliation Act, 1996 the
governing arbitration statute in India. It is based
on the Model Law on International Commercial
Arbitration adopted by the United Nations
Commission on International Trade Law
(UNCITRAL) in 1985.
INTERNATIONAL CONVENTIONS ON
ARBITRATION
India is a party to the following conventions
 the Geneva Protocol on Arbitration Clauses of
1923
 the Geneva Convention on the Execution of
Foreign Arbitral Awards, 1927; and
 the New York Convention of 1958 on the
Recognition and Enforcement of Foreign
Arbitral Awards. It became a party to the 1958
Convention on 10th June, 1958 and ratified it on
13th July, 1961. 
REQUIREMENTS OF THE ARBITRATION ACT:
 Section 7(3) of the Act requires that the arbitration
agreement must be in writing.
 Section 7(2) provides that it may be in the form of an
arbitration clause in a contract or it may be in the form of
a separate agreement.
 Under Section 7(4), an arbitration agreement is in writing,
if it is contained in : (a) a document signed by the parties,
(b) an exchange of letters, telex, telegrams or other
means of telecommunication, providing a record of
agreement, (c) or an exchange of claims and defense in
which the existence of the agreement is alleged by one
party and not denied by the other.
  In section 7(5), it is provided that a document containing
an arbitration clause may be adopted by "reference", by a
contract in writing.
INTERNATIONAL COMMERCIAL
ARBITRATION
 The UNCITRAL Model Law on International Commercial
Arbitration was adopted by the United Nations
Commission on International Trade Law on 21 June
1985. In the General Assembly of 11 December 1985 it is
recommended that all States give due consideration to
the Model Law on International Commercial Arbitration. It
covers all processes of arbitral process from the
arbitration agreement to the recognition and enforcement
of the arbitral award and reflects a worldwide consensus
on the principles and important issues of international
arbitration practice This law came into existence because
of two reasons:
 Inadequacy of domestic laws
 Disparity between national laws
IMPORTANCE:
You generally choose arbitration:
1. for its confidentiality (no public hearings, no
publication of the awards unless accepted by
the parties, no formal registration of the award
by public or tax authorities, no media. You can
even agree upon total silence for all parties,
competitors cannot get information). It is often
preferred for (potential) disputes about M&A,
joint ventures, patent cases, IP, when important
tax consequences could be involved, etc..
2. in order not to disrupt the shaken business
relationship (arbitration is more friendly and
less aggressive), can be more gentlemanlike.
You can even be judged by peers. Often you
will have to be able to go on with the same
business partner after the arbitration; etc.
3.o for speed (no appeal(s), no backlog of the
court, etc.) and to save money (in some cases)
o the parties at least have some influence on
the choice of the arbitrators and can choose
very competent, specialized and trusted
arbitrators. Their decisions will therefore be
easier accepted.
4. it is possible to introduce technical expertise in the
arbitration panel itself, which is an advantage for
technical disputes (f.i.: construction cases, industrial
insurance cases, transfer of know-how, commodity trade,
etc.). This avoids the need for the judge or the arbitrator
to appoint an expert to give a technical opinion, and thus
avoids loss of time. You don’t want the decision to be
taken by someone who knows almost nothing about your
business or the technical matters at hand. With
arbitration you can combine technical experts and
lawyers into one panel.
5. o to combine skills and knowledge about different legal
systems into on panel.
6. “Final, binding decisions
While several mechanisms can help parties reach an
amicable settlement - for example through mediation
under the ICC ADR Rules - all of them depend,
ultimately, on the goodwill and cooperation of the parties.
A final and enforceable decision can generally be
obtained only by recourse to the courts or by arbitration.
Because arbitral awards are not subject to appeal, they
are much more likely to be final than the judgments of
courts of first instance.
7. International recognition of arbitral awards
Arbitral awards enjoy much greater international recognition
than judgments of national courts. Over 134 countries
have signed the 1958 United Nations Convention on the
Recognition and Enforcement of Foreign Arbitral Awards,
known as the "New York Convention". The Convention
facilitates enforcement of awards in all contracting states.
8. Neutrality :In arbitral proceedings, parties can
place themselves on an equal footing in five key
respects:
1. Place of arbitration
2. Language used
3. Procedures or rules of law applied
4. Nationality
5. Legal representation
Arbitration may take place in any country, in any
language and with arbitrators of any nationality.
With this flexibility, it is generally possible to
structure a neutral procedure offering no undue
advantage to any party.
DISADVANTAGES of arbitration
 Arbitration can sometimes get very expensive indeed:
the parties have to pay or at least advance the arbitrators
fees and the administrative costs. The award will decide
upon the question which party or parties will finally have
to support the fees and costs. But there will be no appeal
(s) and that can save a lot of money.
 􀀹 Independence and impartiality of the arbitrators have
to be carefully monitored. Therefore you should avoid
some mollified and purely commercial arbitration
institutes, sometimes even organized by disbarred
lawyers. Don’t accept arbitration clauses referring to
unknown arbitration institutes and always be informed
(trough LNA members). Ad hoc arbitration can even be
more dangerous.
 􀀹 “Sudden death”: no appeal is possible. As a client
and as a lawyer you cannot make any mistakes, omit
anything of importance, etc.. Quite stressing.
ENFORCEMENT OF FOREIGN AWARDS
In Arbitral proceedings with more than one arbitrator, any
decision of the arbitral tribunal can be made, unless
otherwise agreed by the parties, by a majority of its
members. If during arbitral proceedings, the parties settle
the dispute, the arbitral tribunal shall terminate the
proceedings if requested by the parties and the
settlement can be made in the form of an arbitral award
on agreed terms. The award shall be made in writing and
shall be signed by the arbitrator. The arbitral proceeding
with more than one arbitrator the signature of all
arbitrators are mentioned. The award shall state the
reasons upon which it is based. The award shall state its
date and place of arbitration. After the award is made the
copy of each signed proceedings shall be distributed to
each party.
With in thirty days of receipt of award a party with
notice to other party may request the arbitral tribunal
to correct any error relating to computation, clerical
or any other error of similar nature.
Article 14, “Enforceability of settlement
agreement”, of the Conciliation Model
Law:
“If the parties conclude an agreement
settling a dispute, that settlement
agreement is binding and
enforceable . . . [the enacting State may
insert a description of the method of
enforcing settlement agreements or refer
to provisions governing such
enforcement].”
 Foreign Awards
The decision of the Arbitration follows in the form
of an award.Section 44 (New York Convention Awards) of
the Arbitration and Conciliation Act, 1996 defines “foreign
award” means an arbitral award on differences between
persons arising out of legal relationships, whether
contractual or not, considered as commercial under the
law in force in India, made on or after the 11th day of
October, 1960 –
a) in pursuance of an agreement in writing for arbitration to
which the convention set forth in the First Schedule
applies and,
b) in one of such territories as the Central Government,
being satisfied that reciprocal provisions have been made
may, by notification in the official Gazette, declare to be
territories to which the said convention applies.
Section 53 (Geneva Convention Awards) of
Arbitration and Conciliation Act, 1996, defines
‘foreign awards’ means an arbitral award on
differences relating to matters considered as
commercial under the law in force in India made
after the 28th day of July, 1924 –
a) in pursuance of an agreement for arbitration to
which the protocol set forth in the second
schedule applies, and
b) between persons of whom one is subject to the
jurisdiction of some one of such powers as the
Central Government,. Being more of the six
exceptions laid down in Section 13 of the CPC
1908. [Vishwanath V/s Abdual Wajid, Air 1963
SC I]
RECOURSE AGAINST AWARDS:
 The said agreement is not valid under
the law to which the parties are agreed.
 The parties making the application were
not given proper notice.
 The decisions made under proceeding
beyond the scope of arbitration.
 The proceeding was not in accordance
with the agreement