Disputes are an inevitable occurrence in many international commercial transactions. Arbitration is effective means of dispute settlement and ensures final and binding determination of commercial disputes. Disputes can be resolved with great expedition - no unnecessary delay or a lengthy court procedure. Confidentiality is often considered to be one of the main advantages of international commercial arbitration.
It is assumed that an appeal to the courts has been excluded by the arbitration agreement. In some common law jurisdictions it is possible to appeal due to the tribunal failing to apply the applicable law properly or at all. This is the case in English law where an appeal on a question of law may be allowed in exceptional circumstances.
The key factor for the commodity or maritime arbitration is to ensure that the ultimate award is enforceable. Recognition often called an exequatur. The enforceability of awards world wide is considered one of the primary advantages of arbitration. The recognition and enforcement of awards is of paramount importance for the success of arbitration in the international arena. Enforcement proceedings will be either where the respondent is resident or has its principal place of business, or where it has money or other assets against which the award can be enforced. Enforcement proceedings are possible more or less everywhere assets are located. In general the existence of assets within a country is sufficient to establish jurisdiction for enforcement actions. The New York Convention is the cornerstone of international commercial arbitration - foreign awards are primarily enforced under the New York Convention with the extensive global acceptance (over 130 countries are party to the Convention). A re-examination of the merits of the award is not allowed by the Convention. In Ukraine the New York Convention applies to all foreign awards. However, Ukraine is arbitration non-friendly jurisdiction - enforcement is controlled by national courts with an ill-functioning judicial system.
The party seeking recognition or enforcement must submit to the competent court:
• an authenticated award or certified copy and, if necessary, translations and
• the original or a copy of the arbitration agreement and, if necessary, translations.
Unsuccessful party has three options:
- appeal against the award;
- challenge the award in the courts of the place where the award was made;
- wait until the successful party initiates enforcement proceedings before a court at which stage it can seek to resist enforcement.
Awards rendered without jurisdiction have no legitimacy. The absence of jurisdiction is one of the few recognised reasons for a court to set aside or refuse recognition and enforcement of an award. A challenge or appeal will be in the courts of the country of the place of arbitration. If a court decided that the arbitration agreement is invalid the parties are no longer bound by it. Misconduct or irregularity in the arbitration proceedings may lead to delay or even result in an unenforceable award, which is a considerable loss of time and money. New York Convention Article V(l)(e) states that a court may refuse enforcement if an award has not yet become binding on the parties or has been set aside or suspended.
A court may but is not obliged to refuse enforcement if one of the conditions is satisfied: incapacity of a party and invalidity of the arbitration agreement, Violation of Due Process, Arbitrators have Acted without jurisdiction (e.g. the subject matter cannot be settled by arbitration on its own territory, non-arbitrability) or exceeded jurisdiction (ultra petita), Irregular Procedure or Composition of Tribunal, award is Not Binding, or Has Been Suspended or Set Aside. The court may also refuse enforcement ex officio if the award violates public policy of Country of Enforcement. The International Law Association Committee on International Commercial Arbitration published a report and a resolution on public policy as a bar to the enforcement of foreign arbitration awards. Widely accepted examples of violations of international public policy include biased arbitrators, lack of reasons in the award, lack of impartiality; manifest disregard of the law; manifest disregard of the facts; annulment at place of arbitration, contrary to good morals; and national interests / foreign relations, serious irregularities in the arbitration procedure, allegations of illegality, corruption or fraud. More than half of the contracting states have used the reciprocity reservation. Consequently, the reciprocity reservation should be taken into, account when choosing the place of arbitration.
In principle, court control over an arbitration award in challenge proceedings cannot be excluded. Such exclusion could be considered a violation of public policy. Challenge is the only remedy a party has against an award in the courts of the place where the award was made. In the Netherlands enforcement can only be resisted for public policy reasons. When a court accepts the challenge; the award is annulled or vacated and is not enforceable in the country in which it was made. For example, an award made in an arbitration with its seat in England must be challenged in the English High Court, in Switzerland in the Swiss Supreme Court (Tribunal Federal); in France challenges are heard by the relevant court of appeal.
Additionally, the court may set aside the award in part or in its entirety but cannot alter its content. E.g. in the US, lack of oral hearing may be seen as a breach of due process and a ground to set aside the award. In the United States an award may be set aside in the event of manifest disregard of the law if the result would have been different. An award may be challenged if it was made after the expiration of time limits agreed by the parties or provided for in the applicable rules or law. The effect of a successful challenge will be to preclude enforcement of the award at the place of arbitration or elsewhere under the New York Convention.
Therefore, a well-drafted arbitration agreement, a tailor-made choice of law and a competent legal counsel with necessary legal and industry expertise are a must for the proper enforcement and prevention delaying tactics. Our international arbitration practice can ensure swift and smooth resolution of a dispute (including complex multiparty arbitration), which can save considerable costs and time. In addition, a documents-only arbitration and fast-track arbitrations save time and money where the amount at issue is relatively small. A successful party is generally entitled to be reimbursed for the costs of the arbitration and its legal fees. Our arbitration team can prepare comprehensive written submissions, notice of arbitration, request for arbitration, expedite the proceedings, order interim relief, challenge or set aside the award.
Representing interests of clients in the GAFTA, FOSFA Arbitrations
GAFTA Arbitration Rules No.125 are automatically applied to all issues raised within the performance of all GAFTA contracts. Contracts of chartering as per GAFTA are regulated according to the Marine Arbitration Rules No.127. The Rules of Settlement of Small Claims No.126 have been developed in order to deal with small claims in the accelerated order. The award is not subject to appeal and is adjudicated within 2 months from the time of referral of the dispute to arbitration.
FOSFA Contracts also include arbitration clause, which stipulates referring disputes to FOSFA Arbitration.
GAFTA/FOSFA arbitration allows obtaining an arbitral award within 6-9 months from the date of submission of the claim. To save time and money, it can be carried out only a documentary basis, without the presence of the parties and their representatives. Each party has the right of appeal against the award of arbitrators of the first-tier. The commission of five qualified arbitrators considering the appeal is nominated by the respective association. Appeal to a Board of Appeal used in GAFTA/FOSFA commodity arbitrations may confirm, amend or set aside the award. If a party refuses to comply with the arbitration award, the GAFTA/FOSFA reserves the right to notify all members of the Association worldwide that the given party avoids its obligation to comply with the Award. Copyright. MarketplaceUkrRos LLC. www.kpl.net.ua