Sunday, July 26, 2009

Introducing the concept of Arbitration.

A recent report by the Kaieteur News newspapers of Saturday, March 14, 2009 carried the caption “21,366 civil matters pending at Dec 2007”, and detailed the difficulties being experienced by the Judicial system in dealing with the amount of litigation before it. The report gives some account of the efforts at alternative dispute resolution in the field of mediation, as part of the effort by the Justice system to cope with its problems, along with the old idea of appointing part time judges. There is no mention or suggestion of using the age old, highly successful medium of arbitration to dispense with any number of civil matters, as a cost effective, timely alternative to litigation. It is perhaps one symptom of the lethargy of the system that this method is not in use except in Trade Union matters and is the purview of a few handpicked individuals. It is not intended at this time to expound on the use of arbitration locally, but to introduce readers to utility of arbitration internationally, and then in subsequent writings, to discuss the modern application of this medium to our legal problems in Guyana.

The use of Arbitration is applicable to civil matters only and in large part to the efficient disposal of disputes in the field of business, more so in the area of International Trade and commerce, since with the ever increasing amount of global trade and investment, ,businesses are more focused than ever before on the need to find a suitable means for resolving international commercial and investment disputes.

Historically, parties often resorted to national court systems and the party with the most bargaining power was able to insist on the application of its national law by its own national courts in the event of a dispute, thus placing the other party at a potentially significant disadvantage. Today, businesses are more sophisticated and often seek to find a neutral venue and means for resolving international commercial and investment disputes, such as international arbitration.

One of the main characteristics of international arbitration is the notion of party autonomy. This means that parties to an international commercial transaction can fashion the dispute resolution clause in their contractual agreement to provide for international arbitration in a way that meets their particular needs.

What is Arbitration?

Arbitration is a private dispute resolution process where parties agree in writing to submit their potential disputes to an arbitral tribunal, usually comprised of one or three arbitrators, instead of using a national court system. Such proceedings are typically more flexible and informal than court proceedings. The parties agree on the law that will apply and the location where the proceedings will occur, both of which are often chosen from a neutral jurisdiction, as well as the arbitral rules that will govern the proceedings, and even the language in which the proceedings will be conducted. The arbitration can be administered by well established international arbitral institutions like the International Chamber of Commerce (ICC), the International Centre for Dispute Resolution (ICDR), or the London Court of International Arbitration (LCIA), or can be conducted ad hoc according to procedures specified by the parties or established by an arbitral tribunal.

How does it work?

The arbitral tribunal hears witnesses and receives other evidence and legal arguments presented by the parties during hearings conducted in a private setting and renders a binding decision on the dispute. The tribunal renders its decision in the form of a written award which, if it complies with the New York Convention on the Recognition and Enforcement and of Foreign Arbitral Awards, can be executed and enforced in many countries throughout the world. This means that arbitral awards are typically far easier to enforce internationally than judgments obtained from national courts because there are very few international treaties concerning the enforcement of court judgments. As a result, a party seeking to enforce a court judgment in a foreign jurisdiction must often undergo a lengthy process which involves commencing new legal proceedings in the country where the judgment is sought to be enforced. Arbitral awards also have more finality than court judgments due to the limited ability to appeal such awards. In summary, international arbitration therefore provides a fair, efficient, and cost effective means of resolving disputes arising from international trade and investment.

Who is an arbitrator?

An arbitrator is a trained neutral third party, who is usually highly trained or skilled in a particular area, to whom a dispute is referred for settlement. The Arbitrator is bound by some formal rules and controls the proceedings much as a judge controls a court room. The arbitrator’s role is more flexible, and she or he may ask questions of witnesses, visit sites, and conduct the hearings in a more informal manner then a judge. The rules of evidence which apply in a normal trial are applicable in arbitration and she or he must hear submissions from lawyers as well. Sometimes the arbitrator may not conduct a hearing but may write an award based on the basis of submitted documents only, this is done where the parties elect to proceed in such a manner.

Contrary to some popular beliefs, arbitration does not mean that a judgment will be split half and half or equally among the parties, as the award will be made based on what the arbitrator adjudges to be fair , and very often where the arbitrator is legally trained, some legal principles will be applied in making an award.

It is of some significance therefore that Guyana’s laws include an Arbitration Act which allows for the appointment of arbitrators by the court, to deal with any matter or matters as it sees fit, and includes the provisions for international arbitrations. The implementation of an arbitral scheme could make a significant difference to the efficacy of Guyana’s legal system.

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