Wednesday, 13 February 2019

Critically discuss the advantages and disadvantages of international arbitration, compared with litigation, as a means of resolving international business disputes.

Freedom to choose a neutral and competent body for dispute resolution is a significant advantage of arbitration over litigation. Each party to an international transaction might be reluctant to submit to the jurisdiction of the other party’s home court. It is commonly believed that such a court could be biased toward the party coming from the state litigated in. Arbitration can thus be seen as a trusted process, whereby a balance is struck between the influence of each contractor, regardless of the composition of the tribunal. In addition, choosing arbitration would be a valuable option if certainty of having a body proficient in a particular field adjudicating upon a dispute is sought. By contrast, resolution of a complex commercial matter in a court might result in a judgment based upon misconception or in a significant delay due to the need for expert evidence.

Finality and enforceability of an international arbitral award are two further advantages of the arbitration process when compared with litigation. Conclusiveness of an award makes arbitration a more efficient process than litigation. Nonetheless, lack of an appeal procedure is only of benefit if the award issued is sound. English law, for instance, allows for an appeal from an arbitral award on a point of law in limited circumstances provided for under section 69 of the Arbitration Act 1996. As a result, not only fairness of the process might be at risk of being challenged, but also development of commercial law may be inhibited. Litigation is, therefore, much better suited to ensuring a just outcome in a given dispute. Still, it is easier to enforce an international arbitral award than a judgment of a court of a particular state, especially if enforcement is sought in a Member State of the New York Convention 1958. This is of distinct advantage since party against whom enforcement of an award is attempted might hold an asset in a different jurisdiction than the one in which the decision was made. Domestic law regarding enforcement of foreign judgments might also allow for a more extensive review of a judgment than the New York Convention 1958 does in respect of an arbitral award.

Confidentiality of the arbitration process is yet another advantage of that form of dispute resolution over litigation. It is, however, to be borne in mind that unless specifically agreed, there is no duty placed upon either party to maintain the proceedings confidential.

Tuesday, 29 January 2019

Critically discuss, with reference to the international conventions and domestic laws addressed in class or in the assigned readings, how the United Nations Convention Against Corruption has improved on previous approaches to the regulation of international corruption, and how might it nonetheless still itself be improved.

There have been many domestic laws and international conventions which have had the objective of regulating international corruption. Many have met with limited success and have suffered from similar shortcomings. The United Nations brought into force the Convention against Corruption in 2005 with the aim of addressing these shortcomings. The UNCAC’s new approach is overall a step in the right direction, but there is still much room for improvement in this area.
Corruption was defined by the IMF in 2011 as the abuse of public authority or trust for private benefit. In the context of international trade and business, corruption often takes the form of payments by corporations to persons in authority in order that they exercise their discretion in their favour.
Regulation initially had a narrow definition of corruption and focused primarily on bribery, and the regulation was very soft and lacked bite. An example of a domestic law of this type is the USA’s Foreign Corrupt Practice Act which came into force in 1977; this law had a very narrow approach as it solely prohibits bribery of foreign public officials, and it expressly permitted ‘facilitating’ payments which do not involve the corruption of a discretion per se, but merely speed up a corporation receiving what it is entitled to, and it permitted payments which are legal in the country in which they are made. An example of an international convention is the United Nations Convention Against Transnational Organized Crime which came into force in 2003. Although this convention prohibited passive as well as active bribery, the scope of the Convention is still limited to bribery and fails to address other forms of corruption. Moreover, the only enforcement mechanism is self-reporting by member states; there is no external monitoring or sanctions on member states for breaching the Convention.
What the UNCAC brought to the regulation of international corruption is a convention which addresses a wide range of corrupt practices, is ratified by a large number of countries, and has a coordinated, deeply penetrating application.
UNCAC’s definition of corruption is not limited to bribery of foreign public officials, but addresses bribery of domestic public officials, bribery of officials of public international organisations and bribery of private individuals.
UNCAC is ratified by 140 member states and requires them to provide mutual assistance in combating corruption. Unlike its predecessors, it puts specific obligations on member states such as to allow damages against victims of corruption and to recover and return stolen assets. Another aspect of the UNCAC which contributes to its deep penetration is that it aims to mobilise societies at large against corruption, which can be seen in the establishment of the UNCAC coalition, a network of over 300 civil society organisations.
Despite the promising new approach of the UNCAC, its implementation has revealed some areas for improvement. One such area is the weakness of its monitoring system; in January 2008, only 52% of states had completed the self-assessment. Also, many developing countries have struggled to fulfil their obligations under UNCAC due to a lack of policy guidance and technical assistance.

Sunday, 13 January 2019

“A court’s only role in an international arbitration is to facilitate the process. It has no business intervening into a private process unless both parties have agreed that it can do so.” Critically discuss.

Court involvement in an international arbitration is a fact of commercial life. In England and Wales such intervention should always be confined to the extent specified in Part I of the Arbitration Act 1996. In particular, sections 42-45 provide examples of the court’s power to interfere with the process. Even though a court might be allowed to intervene, it can only do so to the degree and under the conditions prescribed therein. Moreover, the parties can agree to exclude the power of the court under these provisions altogether, with the exception of section 43 which enables the court to require the attendance of a witness in order to give oral testimony or to produce documents or other material evidence. These provisions are intended to supply the court with tools to facilitate the alternative dispute resolution mechanism selected by the parties.

Nonetheless, a party to arbitration may challenge the award issued by the tribunal in a court of law in accordance with sections 67-69 of the Arbitration Act 1996. While section 69, i.e. appeal on point of law, might be ousted by a contrary agreement of the parties, the other two provisions are mandatory in application. It is, however, to be borne in mind that both parties made themselves subject to the substance of the Arbitration Act 1996 by choosing the law of England and Wales as the curial law of the arbitration proceeding. Therefore, it cannot be said that such an intervention of a court would be contrary to the intention of either party.

Unquestionably, the facilitating role of a court of law in respect of an international arbitration is enshrined into the text of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (the New York Convention). Pursuant to Article II, III and V of the New York Convention, court involvement is required as support for the arbitral process in the form of recognition and enforcement of an award, nothing else. Nevertheless, under Article V of the convention a court is provided with a substantive power of intervention. Out of the seven grounds for refusal of recognition and enforcement, two can be raised by the court ex officio, the other five being valid for consideration only if brought up by a party to the arbitration. First, recognition and enforcement may be refused if a court believes the subject matter of the dispute in question not to be arbitrable. Secondly, no recognition or enforcement is possible if such would constitute a breach of public policy. Consequently, a court might intervene in the process despite no agreement of the parties to such effect.