Advantages of Arbitration
It is an alternative dispute resolution mechanism to the courts. It is private and informal, through it the parties undertake to resolve their dispute before one or more impartial persons (the arbitrators), who are authorized to resolve the matter through a final (mandatory) resolution, which has the same value of res judicata as a sentence, and like these, can be enforced.By arbitration both an existing dispute and a possible future dispute arising from a contract in which a clause of submission to arbitration appears may be resolved.
The parties may agree to submit to arbitration without further ado (arbitration ad hoc), or agree to submit to arbitration according to the rules of procedure of a court or specific arbitration institution, which is responsible for administering the arbitration procedure, taking care of that the arbitration is set in motion, is conducted in a manner consistent with its rules of procedure, and is decided by the appointed arbitrators.2 The courts or arbitral institutions are not responsible for deciding disputes, which is the role of the arbitrators, but only administer the arbitration procedure, in the sense referred.
However, before the issuance of the final award, the parties may request a correction or supplement to it. A foreign award can be submitted to an approval process (exequatur) for recognition and enforcement. Among the main advantages associated with arbitration as a mechanism for the resolution of commercial disputes, and in contrast to the ordinary Courts of Justice, it is important to highlight the Following:
- Simplicity of the dispute resolution procedure.
- Rapidity (in general, less time is required than in judicial processes) .
- Flexibility. The parties have the right to choose between a single arbitrators or an arbitral tribunal composed of several arbitrators, depending on the complexity of the dispute. In addition, arbitrators have greater freedom in the application of legal rules than judges.
- Neutrality. The arbitral tribunal must constitute a neutral position for the resolution of disputes, being disconnected from the judicial organs of the countries of which the parties are natural3.
- High technical quality, before the possibility of appointment of specialized arbitrators in the matter. In addition, arbitrators usually have a greater time available to study the case in dispute, which may result in greater efficiency, as well as robustness and argument support from the award.
- Confidentiality.- The parties can opt for the absolute confidentiality of the entire arbitration process (against the general principle of publicity of judicial proceedings) .
Part B: Legal Aspects
- Default cost, known from the beginning of the process.
Despite the aforementioned advantages and the extensive support for agreements that support the enforcement of awards, reality and business practice. It is evident that the existence of limitations in the appointment of arbitrators for reasons of incompatibility, as well as the difficulties derived from the execution of the award in certain countries. Nevertheless, international arbitration has been consolidated as an extrajudicial dispute resolution mechanism in foreign trade operations.
The arbitration is of enormous importance in the contemporary world and has now acquired an unusual relevance in our country. It must be borne in mind that the General Arbitration Law that entered into force. It reverses the relationship between legal and equitable arbitration. Recall that, traditionally, the arbitration of law was the rule, while the arbitration of equity was the exception: if the parties had not determined the type of arbitration, it should be understood that it was of right. In contrast, article 3o. of the new Law provides that, unless the parties have expressly agreed that the arbitration shall be by law, the arbitration shall be conscientious: now, then, the arbitration of conscience becomes the rule and the arbitration of law in the exception4.
Above all, the law of arbitration operates the known as the exception of the unfulfilled contract. As a result of this exception, one party can not demand compliance, to a party according to section 68 English Arbitration Act 1996 who has not complied or is not willing to comply.
In such case, the exception known as exceptio non rite adimpleti contractus may be resorted to. According to this exception, it is possible to demand compliance with the obligation by the party who has complied with the defect (without the need to have breached it). This exception operates the same as the previous one, but is based on partial or defective non-compliance.
Can the contract be terminated due to non-compliance?
You can also ask for a resolution, even after having opted for compliance, when this is impossible.
What would happen if the non-compliant object to the termination of the contract?
In that case, it will be the Courts of Justice that will decree the resolution that is claimed. And this provided that no deadline can be set for compliance.
The requirements are the following:
(1) that they are reciprocal obligations.
(2) that the company who has requested it has complied or is willing to comply.
Part C: Award and Appeals
(3) there is a serious breach that leads to the frustration of the end of the contract (in case of partial or defective breach must be to the specific case.
Whereas if the resolution were required, it would be necessary to add the negative contractual interest that is the comparison of the current situation with the situation immediately before the conclusion of the contract.In many contracts the automatic resolution is agreed, despite the fact that Article 1124 says that the resolution is judicially decreed5.
For example, this issue of the penalties that can be placed on the concessionaire for non-compliance, if they are exclusively contractual and do not affect third parties or competitors, can be perfectly arbitrated, provided they are subject to a protection agreement of investments. But not the sanctions that are the result of the transgression of rules in the framework of administrative procedures such as the protection of quality and user rights.
arbitration is usually designed to resolve disputes between two parties, so if in the scope of a concession contract the regulator imposes a penalty on the company, which only affects the company, such as the fulfillment of a deadline, and there is an arbitration clause or investment protection agreement, it is perfectly arbitrable.
That is why it is a good way for penalties, but not for sanctions that result from administrative procedures for breach of rules whose purpose is to protect the competition or users.
an arbitration does not take away the sanctioning power of a regulatory body, nor that their decisions are questioned in the Judiciary, given that both are mechanisms for rendering accounts. In this regard, said that it is wrong to argue that the work of regulatory bodies is at stake for arbitration, they are only dispute resolution mechanisms that do not put their stability at risk6.
The injured party may choose between demanding compliance with the contract or resolution of the obligation.
Webel & Gigoux Inc. (WGI) should just pay and not appeal the decision since the breached the contract by offering poor services that led to financial loss. On the other hand, Park, Jones and Shipton Ltd (PJS) has dome well to go to the high court and enforce the award.
In arbitration, the difference with the ruling is that the award cannot be appealed, because there is no second arbitration, however, you can resort to the ordinary jurisdiction to annul the award, but this appeal can only be based on formal and assessed reasons (for example, that the arbitrators have decided on issues that the parties did not submit to their knowledge), and that, in general, does not allow a substantive review of the decision adopted by the arbitrators.
Additionally, Faced with this reality, the legal systems of most countries contemplate arbitration and mediation as a perfectly valid alternative to liquidate litigation faster and less costly7. Example,the operation is relatively simple. It only requires the formal commitment of the two parties to resolve their possible or present conflicts through an arbitrator or a qualified court. The decision or award, for better or for worse, will end the conflict and will be assumed unequivocally as any final judicial decision.Experience teaches us that most commercial disputes are resolved between the parties without the need for a court to pronounce judgment. This technique to resolve possible future conflicts can be applied in all contracts and conflicts. According to the general director, many businessmen and businessmen are aware that legal adventures will cause loss of money and hours of activity.
They also know that the resolution will be delayed for several years because of resources and more resources. The private arbitration clause must comply with the following requirements in order to comply with current legislation: refer to the contract; determine the method to follow (arbitration, mediation, ad hoc trial .); appoint the administrative agency that will participate in the arbitration; and, finally, specify the arbitration regulations to be applied. In arbitration, costs and expenses of travel and representation, among others, can also be recovered.Part A is more broader that part B where in Part B, arbitration deals with a contract signed between two companies one of which has breached the contract.
Bradgate, Robert, Fidelma White and Margaret Llewelyn, Commercial Law (University Press, 2012)
Commercial Law (Cavendish, 2006)
Goode, Royston Miles, Commercial Law (Butterworths, 2009)
Modernised EC Competition Law In International Arbitration (Wolters Kluwer Law & Business, 2006)
Mu?ller, Christoph, Swiss Case Law In International Arbitration (Bruylant, 2010)
Reddy, Jothi and Rick Canavan, Q & A Commercial Law
Willy, A. A. P and A. A. P Willy, Arbitration (Brookers, 2010)
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