International Commercial Arbitration

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International CommercialArbitration

Is that really delivering justice?

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The recent surveys show that there is growing concern over the process. ICA is losing its credibility and attraction among the parties due to excessive costs, time and unpredictable arbitral awards. Even as arbitration awards �nd criticisms from the losing side, so little has changed in terms of the mechanisms and procedures used by tribunals and practitioners.

The rapid growth of international trade and exposure to new partners, countries, cultures, legal systems and trade practices is bringing new challenges and risks for the international cross-border trading and commercial transactions.

Dispute management, prevention and resolution is one of the very important aspect of risk management in international commerce and transactions. Dealing with international cross border disputes is becoming highly expensive and effects small businesses to its core, sometimes endangering their existence. How can businesses avoid or resolve disputes during various contractual phases, from negotiation through to performance?

The lack of a delocalized international court system with the power to resolve private cross-border disputes of all kinds has led to a fragmentation of dispute settlement forums, and arbitration became the preferred method for the resolution of such disputes. Mainly due to the fact that legal fraternity world over pushed this private adjudicative method of dispute resolution – the most loved method of quali�ed legal professionals around the world.

Until recently, international arbitration was widely seen as fair, neutral, and effective. The �eld’s rapid growth reinforced this perception, helping establish international arbitration as the default mechanism for resolving transnational disputes. Today, this perception is changing. International Arbitration is becoming too costly, time consuming and inef�cient. Many now doubt the fairness of the arbitration process, the integrity of some decisionmakers and institutions, the binding effect of awards, the options of appeals when awards are arbitrary and the legitimacy of awards obtained in international arbitration. The arbitration system has become too arbitrary and broken down to a degree and needs a new avatar - a new way to deal with international cross border dispute resolution.

There are several methods and mechanisms of dispute resolution, not just arbitration, many of these methods can be combined with arbitration, to ensure early and cost effective resolution, and the binding effect and enforcement of the awards.

In the last few decades, the use of other

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consensual ADR mechanisms has increased, but not much happened in the International Commercial Dispute Management Arena. Most of the arbitrators and institutions have acted alike, to predominantly focus on the adjudicative approaches only.

Dealing with cross border disputes bring lot of stress and anxieties due to that fact we feel not at home. There is a strong need of one “Delocalized international commercial dispute management system” governed by the businesses and business stakeholders themselves. We can not rely on just one process “Arbitration” and just few institutions administering this process with limited pool of arbitrators for resolution of commercial disputes. We need an inclusive, integrated comprehensive system in place, that is

free of all the systemic bias and overload.

Currently, international commercial arbitration embodies, to a large extent, western standards, but a key question is whether or not those standards are the correct standards of �nding commercial solutions around the world.

Today, we need a system and an institution that attracts and appeals to a growing base of users from the developing world. Merging different arbitration cultures (eg East, West, developed and developing) and using an hybrid or combination of different process (not just Arbitration process) will make this world a safer place to transact and trade across borders. The practice and regulation of international arbitration must better re�ect its broad international user base: to recognize the

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international nature of arbitration and to fully integrate different approaches and attitudes towards arbitral law and practice.

Parties need a wider range of DR options besides Arbitration, to select a method most appropriate to their cause and to resolve commercial and trade disputes in the best interest of International trade community and all its stakeholders and to deliver actual justice to all parties - big or small.

Parties in the international commerce need to feel secure, having a safety net to protect their genuine business commercial interests within a well de�ned and dynamic legal and commercial eco-system.

Who cares?

When you are in an international arena, wanting to protect your own commercial interests related to cross border transactions. Maybe only you and the other party will have to care about the safety and management of con�icts between themselves in most apt manner. The business communities in cross border disputes cannot leave this to the states as no one other than businesses themselves will be able to see or care for the ever changing perspectives, needs and interests of businesses in the International transactions.

Complacency is the buzz word. The international rule makers will be

complacent about the process and the outcome until we ourselves �nd the solution. No outsiders will be able to continually recognize the changing demands of the users of the process.

We all need a system that is all time concerned and �exible about the ever changing needs and demands of communities in the international crossborder transactions and ensure that the complacency is never the barrier to this most important safety need of businesses in international transactions.

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How FICM-MCN ecosystem is enabling dispute resolution for international commercial transactions?

Governed by all its members, FICM- MCN is transforming the International Commercial Arbitration landscape. It will now be no more an old boys club or the sole domain of handful arbitrators operating from handful arbitration Institutions from select jurisdictions. The new word thinkers and doers, innovators and a diverse plethora of wisdom are changing the way commercial disputes are resolved internationally. The plain "Arbitration" with age old process is giving way to innovative hybrid approaches, designed, devised, developed and administered by the institution that is governed by the international business community itself.

Parties are willing more and more to appoint new faces backed by the FICM-MCN trust for neutrality, quality and ef�ciency to ensure speedy proceedings and awards that set the disputes to its �nality. The strong con�ict rules; procedural controls and unique mechanisms of appointments of Neutrals are enhancing the legitimacy of the process and overall satisfaction of parties with the process and its outcome.

As international commercial transactions have grown in complexity,

self governed international commercial dispute system is emerging as a governance structure that possess the requisite �exibility, technical expertise, privacy, con�dentiality, and speed to allow these transactions to operate ef�ciently. By employing a wide range of highly professional new world dispute resolvers (mediators, arbitrators etc.) FICM-MCN is creating a highly effective system in which rarely awards may be challenged.

Governed by its members from around the world, the organization is one of its kind neutral body shaping the International Commercial Dispute System design, that serve the best interests and needs of international trade and commerce.

FICM-MCN will keep on establishing a hierarchy of commercial legal norms that integrate both transnational and domestic public policy concepts. This hierarchy of norms, along with democratic structure governed by all members, will form the core of our emerging constitutional order beyond the nation-state, to accomplish the mission of one world, one institution – to deliver commercial meditative justice.

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The goal is to all time maintain arbitration (dispute resolution) as a �exible, speedy and costef�cient dispute settlement mechanism where the arbitrators and the parties conduct the process according to the requirements of the particular case and not try to use a one size �ts all approach.

Enriching the practice of international integrated arbitration (integrated dispute resolution) and address issues of integrity, a change in the culture that promotes selection of due process, seat of arbitration, venue, selection and appointment of dispute resolution experts, neutrals (negotiators, mediators, arbitrators etc).

Domestic courts of many countries, and in particular the United States Supreme Court, have largely left transnational adjudication to the realm of arbitration. To achieve this support for the International Commercial Dispute Resolution, it is necessary to construct one autonomous global-wide ecosystem, a network and a culture that de�nes International Commercial Dispute Resolution. To develop a governing structure which will de�ne modern arbitration, to move towards instituting own mandatory norms and to defend the continued expansion of capitalism and legitimize the private resolution of International Commercial Disputes.

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Impartiality and the perception that decisions are being made by an ‘old boys’ club’.

A limited pool of arbitrators with institutions is one of the causes of resulting delays in scheduling hearings and receiving awards. FICM-MCN is addressing this key issue, by the appointment of the largest, widest and deepest pool of talent as Neutrals from around the world.

The Process

Several procedures of FICM-MCN include some that will be based largely on documents, with less reliance on witnesses and having short hearings. While the proceedings may not be ‘fast-track’, the time and cost of the entire proceeding will be contained.

Rules of Dispute Resolution Processes

The FICM-MCN Rules are the most comprehensive range that can custom �t almost all kinds of cases emanating from contracts and jurisdictions. This approach needs a very tightly managed dispute management system governed by the users only, as the commercial agreements at times, rarely describe in detail how the dispute resolution procedure will be conducted, and once a dispute has arisen, parties often �nd it hard to agree on such matters.

Costs issues

Various surveys have identi�ed cost issues as “arbitration’s worst feature”. Such feedback cannot be ignored and is related to the second most disliked feature of arbitration in the survey, namely the lack of effective tribunal sanctions. Therefore, working on tribunals’ ‘due process paranoia’ will assist in reducing costs.

Enforcement and the true time line of resolving an arbitral dispute.

award is something that one needs to consider at the very outset of the proceeding because if there is no prospect of �nding assets against which to enforce the award, then one is going to be throwing good money in a deep hole.

The enforcement of arbitration awards is something that often involves skilled lawyering to the same degree as the conduct of the proceeding itself.

At the time of contract negotiation, one must make sure that waivers of sovereign immunity are in the contract to provide with the opportunity of going after a governmental agency and ultimately enforcing an award against its assets or against the assets of the sovereign without being faced with the defense of sovereign immunity.

Out of the anxieties, corporate parties’ try to choose governing law (seat) of their home jurisdictions. When that is not possible, parties in countries that are not favored as seat of arbitration have a tough time to decide the choice of seat. Although governing law is one most critical factor for parties, but its impact can be limited to some extent with a carefully drafted contract. Horror stories of enforcement delays are many, where an arbitral award rendered in 2004 and valued at over $340m was still subject to an enforcement stay in England in 2015.

As courts have found, the role of arbitration is to foster international trade and that role is underwritten by arbitral institutions, courts, arbitrators, advocates and parties alike. The competitive diversity of stakeholders in international arbitration is the cornerstone of its adaptability and constitutes the force that is best placed to ensure it remains a reliable forum for dispute resolution.

Are you in the International Trade? Wish to keep a safety net on your internal transactions? Give a call to one of our members at 08505999820

An international arbitration award is not worth the paper it’s written on unless it can be enforced, and so the enforceability of the