INTRODUCTION
This paper attempts to discuss the arbitral
institutions and the considerations parties and counsel must contemplate in
selecting an arbitral institution, which is a crucial process and can indicate
from the on-set, the seat of arbitration which is primary in initiating,
deliberating and enforcing an arbitral award.
This discourse provides a comparative
analysis of some top global arbitration institutions and the advantages or
challenges arbitration institution users must reflect on in choosing an
institution, as well as providing a further insight into the growing trend in switching
between Arbitration and Mediation and its efficacy in resolving international
disputes with a particular focus on the emerging areas in Africa, particularly
Nigeria.
ARBITRATION
AGREEMENT VIS-À-VIS ARBITRATION CLAUSES
Most arbitration agreements are entered
into as exit strategies, they are inserted into agreements without much thought
as to the dynamics of the arbitration proceedings in the event the contractual
relationship actually goes wrong.
No partner wants to be the one proffering
detailed solutions as to how their marriage should be dissolved if it gets to
that, but as much as we all want a happy ending, some marriages must dissolve.
Thus, when things go wrong, parties have to ensure that their arbitration
agreements fulfil their expectations of an easy way out; the best ‘exit
strategy’.
Practice has shown that parties enter into
arbitration agreements either in compliance with global standards and trend or
with limited background information. This presentation focuses on guiding
individual and businesses in choosing the ‘right’ arbitration institution when
drafting arbitration agreements.
The foremost choice to make in drafting
arbitration agreements is to decide on what form the terms should take, as an
ad-hoc arbitration or institutional arbitration.
An ad hoc arbitration clause, requires a
less formal structure. Hence, it may be preferable for parties to create a
detailed structure for the arbitration in the agreement, or else agree to the
application of non-administered arbitration rules like that of the United
Nations Commission on International Trade Law (UNCITRAL).
In institutional arbitration, the task of
agreeing to relevant procedures can be fairly easy, as all institutions have
their set of rules governing the conduct of the arbitration process if there is
no contrary agreement between the parties.
A survey of international arbitration users
in 2015 found that 79% of the arbitrations they were involved in over the
previous five years (2010-2015) were institutional arbitrations (2015
International Arbitration Survey: Improvements and Innovations in International
Arbitration by the School of International Arbitration at Queen Mary University
of London. The survey is available on the QMUL’s website).
There are several reasons for this
preference for institutional arbitration. An institution can lend political or
moral weight to awards. More practically, because institutional rules are
designed to regulate the proceedings comprehensively from beginning to end, the
institutions are better suited to cater for contingencies that might arise,
even if (as sometimes happens) a party fails or refuses to cooperate. By
incorporating an institution’s rules into the contract, contracting parties
also avoid the time and expense of drafting a suitable ad hoc clause.
As noted above, the institution will also
assume administrative responsibility for the arbitration, and take care of
fundamental aspects of the arbitration procedure. The fees and expenses of the
arbitration are, with varying degrees of certainty, regulated, and some
arbitral institutions independently vet awards to ensure enforceability.
WHY
CHOOSE AN ARBITRATION INSTITUTION?
Arbitration institutions have their
distinct features in terms of their modus and form. Some of these features are
determined by the institutions based on their peculiar services, like the
expensive commencement fee of the International Centre for Settlement of
Investment Dispute, while others are not so much in control of the
institutions, like territorial locations.
The London Court of International
Arbitration (LCIA) for example, is expectedly situate in London. Therefore,
just like determining what size of shoes to buy according to the size of one’s
foot, so is choosing an arbitration institution according to the peculiarity of
the nature of business or relationship entered into.
It is imperative that parties decide what
arbitration institution with a profound knowledge of the various systems and
mechanisms of the institution and how they best fit in with their business.
There are many institutions to choose from.
As a general rule, newly formed institutions or institutions without a proven
track record should be avoided.
That aside, there is no magic formula for
choosing between them. Increasingly, institutions and institutional rules are
offering similar processes with little to distinguish them. An example is the
widespread introduction of mechanisms such as emergency arbitration, once a key
distinguishing feature of only certain leading institutions. Such similarity
leads parties to look to more subjective factors in deciding which institution
to use: familiarity with the institution, their opinion of the international
acceptability or reputation of a given institution, the proactiveness and
responsiveness of the institution’s staff, and the institution’s neutrality or
“internationalism”.
It is important to recognise that
institutional arbitration rules provide only a framework for the procedure of
the arbitration. The way in which the arbitration is conducted will be
determined by the specific approach of the arbitrators. Factors such as their
degree of experience in international arbitration, legal background and
training, and views on the legal issues for determination in the arbitration
will influence their approach. It is therefore essential to consider carefully
the approach you want the tribunal to take when selecting your arbitrator.
In choosing an arbitration Institution,
certain criteria have to be taken into consideration. Some of the major ones
include:
(i)
The seat of the arbitration;
(ii)
The level of involvement of the arbitration
Institution;
(iii)
Privacy;
(iv)
Fast track arbitration and early determination;
(v)
The
relative abilities and expertise of the institutions with respect to types of
subject-matters;
(vi)
The relative experience and ability of
the institutions’ administrators or secretariats respecting case
administration;
(vii)
Relative
reputation insofar as reputation may enhance or undermine the prospects for
enforcement of an arbitral award;
(viii)
Cost,
both administrative and arbitrator fees; and
(ix)
Whether
certain institutions are better suited for arbitration in certain locations.
The Seat
of Arbitration
The ‘seat’ of arbitration, although
abstract in form, is a subject of a legal conflict. Simply, the ‘seat’ of
arbitration is the legal domicile or home of international arbitration. It
provides for the nation’s Arbitration Law that would govern the arbitration.
On the other hand, the ‘venue’ or ‘place’
of arbitration refers to the specific geographical location for the purpose of
the arbitration proceedings. The principles that guide courts to resolve the
disputes of seats are the provisions of the arbitration clause.
Generally, seats imply the laws of the
arbitration that would guide the arbitration procedure while the venue
determines the physical location of the arbitration. The Arbitration law of
Nigeria (The Arbitration and Conciliation Act of 2004) does not expressly
provide for the seat or venue of arbitration, however the court in NNPC v LutinInv Ltd (2006) 2 NWLR (pt. 965)
506 interpreted the usage of ‘place’ to also mean ‘venue’.
In a proceeding to enforce the award of
USD6.6 billion arbitration award against Nigeria, Nigeria argued that the
arbitration was supposed to be seated in Nigeria and not England and therefore
the award should not stand. The court held that reference to ‘venue’ in an
arbitration agreement referred to the legal seat. The agreement in this matter
was actually couched to allow the Arbitration and Conciliation Act of 2004
(ACA) to be applicable, but it went ahead and provided that the venue of the
Arbitration should be London, England or as parties agree. Although Nigeria
successfully overturned the award, it was not based on the ‘seat’ argument, but
on public policy grounds. The court found that since the proceeding took place
in London, Nigerian courts cannot set aside the award. The court’s decision was
based on the following reasons:
- The
clause referred to venue “of the arbitration”, implying that it would
apply to the whole proceedings. This was compared with the language used
in the Nigerian ACA to refer to the physical location, for example where a
tribunal may “meet” or “hear witnesses, experts or the parties”.
- The
clause stated that the venue of the arbitration “shall be” London. If the
reference to “venue” was to where the hearings would take place, it would
be inconvenient for this to be in London given the location of the
parties. The court reasoned that this was not something that the parties
were likely to have intended. In addition, the arbitration agreement
allowed the “venue” to be changed only by the parties, not the tribunal.
The selection of the hearing venue is typically decided by the
arbitrators, further indicating that the parties intended to refer to the
legal seat.
- Reference
to the rules of the Nigerian ACA was not inconsistent with the choice of
England as the seat. Any non-mandatory provisions of the Arbitration Act
1996 were displaced and only the mandatory provisions would continue to
apply.
The seat is a key factor in
any arbitration. It provides a “home” for the arbitration, determines the law
governing the relationship between the tribunal and the courts, and also
determines which court has supervisory jurisdiction over the arbitration
(giving them the power to, among other things, set aside an award). The seat
will also determine where the award has been made, which is significant when
trying to enforce the award.
The physical location of an
arbitration does not have the same legal significance. Generally speaking, the
location is decided based on convenience of all involved. It does not need to
be (and frequently isn’t) the same as the legal seat of the arbitration.
It is important for parties
to designate the legal seat of an arbitration in their arbitration agreement.
This case underlines the benefits of using clear terms when referring to the
intended seat in an arbitration agreement to ensure that the legal seat is
where the parties intended and to avoid unnecessary procedural disputes.
Level of Institutional Involvement
Arbitral institutions have
varying levels of involvement in managing and administering arbitrations.
Institutions such as the Hong Kong International Arbitration Centre (HKIAC),
for example, promote their “light touch” approach with rules
emphasising party autonomy and entrusting the arbitrators with the primary
decision-making power. Other institutions, such as the International Court of
Arbitration of the International Chamber of Commerce (ICC), are known for more
intensive involvement in arbitrations. One practical example of these
contrasting approaches is in respect of scrutiny of arbitral awards.
Institutions like the ICC and the Singapore International Arbitration Centre
(SIAC) engage in a mandatory scrutiny and approval of draft awards of the
tribunal. The ICC Court performs the scrutiny process and may lay down
modifications as to the form of the award and, without affecting the tribunal’s
liberty of decision, may also draw the tribunal’s attention to points of
substance. The idea is to prevent the award suffering from defects in form or
substance that could give rise to difficulties at the enforcement stage. Many
other institutions, such as the HKIAC, London Court of International
Arbitration (LCIA), and the Arbitration Institute of the Stockholm Chamber of
Commerce (SCC), do not scrutinise or approve awards, leaving it to the tribunal
to render a valid award. This difference reflects the varying views about the
value of the scrutiny process, some parties consider the additional quality
assurance to be a benefit, while others see it as imposing unnecessary delay
and expense.
Cost of the Arbitration
There is no straight jacket as to which
institution is best, but each institution has its attendant advantage to
parties according to the peculiarity of the circumstance of each case. Let us
look at the cost variation of five popular Arbitration institutions to help
drive this point. The institutions are:
- The
International Court of Arbitration of the International Chamber of
Commerce(ICC) - The
London Court of International Arbitration(LCIA) - The
Arbitration Institute of the Stockholm Chamber of Commerce(SCC) - The
Singapore International Arbitration Centre(SIAC)
i.
The International Court of Arbitration of the
International Chamber of Commerce(ICC)
In an ICC proceeding, the
arbitrator’s fee and administrative charges depend on the amount in dispute (ad
varolem system). The ICC offers a cost calculator on its website, which will
provide an estimate of the cost of an ICC proceeding according to the current
fee standards.
For the arbitrator’s fee, the ICC Rules set a
minimum and maximum amount. The ICC Court determines the exact cost by taking
into consideration the specific circumstances of the proceeding, such as, for
example, how complex the case is or how timely the tribunal rendered the award.
Where there is a tribunal involving three members, the arbitrator’s fee is
multiplied by three.
The administrative charges are based on a fixed
percentage of the amount in dispute.
ii.
The London Court of International Arbitration(LCIA)
In LCIA arbitration, the arbitrator’s fee and
administrative charges are largely fixed on an hourly rate basis.
After a party has nominated or the LCIA has
selected an arbitrator, the LCIA’s Secretariat asks the arbitrator to advise
the hourly rate applied in the case. The LCIA’s Schedule of Costs generally
sets a cap to this hourly rate, which is currently GBP 450 (USD 608.93 as of
10January2018).
In practice, the LCIA Court will recommend a
certain maximum rate based on the circumstances of the case before the
arbitrator advises the Secretariat about their hourly rate. The recommended fee
is often lower than the maximum rate. Normally, arbitrators follow the LCIA
Court’s recommendation. In cases with a modest amount in dispute, arbitrators
have charged hourly rates of between GBP 150 and GBP 200.
Administrative charges consist of the time-based
charges of the Secretariat, a non-refundable registration fee and an additional
fee equal to 5% of the total arbitration fee. The hourly fees of the members of
the Secretariat vary between GBP 150 and GBP 250, depending on the member’s
function in the Secretariat.
iii.
The Arbitration Institute of the Stockholm Chamber
of Commerce(SCC)
As in
the case of an ICC proceeding, the SCC’s arbitrator’s fee and administrative
charges depend on the amount in dispute. The SCC also offers a cost calculator
on its website.
As with
the ICC Rules, for the arbitrator’s fee, the SCC Rules set a minimum and a
maximum amount. However, where there is a three-member tribunal, the
arbitrator’s fee is not multiplied by three. Instead, the SCC’s cost schedule
defines the fee for the chairman of the tribunal only. The co-arbitrators
generally receive only 60% of such fee.
The
administrative charges are based on a fixed percentage.
As
typical for the ad varolem system, the costof the proceeding
is dependent on the value of the transaction in dispute; the higher the value,
the higher the cost. Overall, arbitrators’ fees and administrative charges are
considerably lower when compared to the ICC. The higher the amount in dispute
is, the bigger this gap is, which means that in proceedings with a high amount
in dispute, the cost difference is substantial.
iv.
The
Singapore International Arbitration Centre(SIAC)
As
in ICC and SCC arbitration, the SIAC’s arbitrator’s fee and administrative
charges depend on the amount in dispute. The SIAC offers a cost calculator on its website also.
For
the arbitrator’s fee, the SIAC Schedule of Fees sets only a maximum amount payable to each
arbitrator. As an alternative to the
Schedule of Fees, the parties may agree on another method for determining the arbitrator’s fees. For the
administrative charges, the SIAC
Schedule of Fees also sets a cap only.
The
SIAC costs range somewhere in the middle between those of the SCC and the ICC. In comparison to the
SCC, the gap between costs is
subject to the amount in dispute involved.
NOTE:
It
is important to note that the institution would not only claim a first filing fee but will also require some
pre-payments to be made. (The
International Centre for Settlement of Investment Dispute requires a $25,000 upfront before a
matter is submitted to it). Those pre-payments
may be claimed before any meaningful step in the proceeding. Also, the total cost of an arbitration proceeding is
more than the sum of arbitrator’s
fee and administrative charges. Depending
on the applicable law in the arbitration proceeding, these legal fees may become a major cost
driver. For example, even if the LCIA
appears to be an affordable option compared to the ICC and SIAC, assuming that the seat of
arbitration was London and the applicable
law was English law, costs might add up quickly when a Turkish party requires legal advice from an English law firm.
Conclusively, when it comes to cost,
although it is important, it is not everything. The ICC is the most expensive
institution; it is yet the most popular. There are other attendant
considerations when deciding an arbitral institution, although cost is
important.
Privacy
Privacy of arbitral proceedings is one of
the key advantages of arbitration. The seat of the arbitration will often
determine what level of privacy and confidentiality is provided and, where
confidentiality is regarded as important, contracting parties should cater for
it in their arbitration agreement. That said, the approach of the institution
towards confidentiality may also be a factor when choosing the arbitral
institution; not all institutions provide for it as a default rule. The LCIA
and DIFC-LCIA Arbitration Centre (DIFC-LCIA) rules, for example, require the
parties to keep confidential all awards in the arbitration, as well as all
materials created for the purposes of the arbitration, and all other documents
produced by a party in the proceedings not otherwise in the public domain. Deliberations
of the tribunal also remain confidential, and neither institution publishes
awards without the prior written consent of the parties and the arbitral
tribunal. The ICC Rules, on the other hand, do not automatically oblige parties
to keep awards, materials and documents confidential, but simply empower the
tribunal, upon the request of a party, to make orders concerning the
confidentiality of proceedings or any other matters in connection with the
arbitration. Further, its Rules do not expressly prohibit publication of
awards, and the ICC regularly publishes anonymised excerpts from awards. From 1
January 2019 the ICC has adopted an opt-out approach to publication of its
awards: underacted awards may be published within 2 years of notification,
unless a party objects or requests redaction.
Expertise
in Certain Types of Cases/Industries
Another distinguishing feature that parties
may look for is whether the institution has expertise in the particular type of
case likely to arise under their contract or in the particular industry in
which they operate. A number of specialist institutions have been set up to
handle disputes in particular areas and industries. Examples include:
·
The Panel of Recognised International
Market Experts in Finance (P.R.I.M.E. Finance), an institution offering
mediation, arbitration and other dispute resolution services to the finance
sector;
·
The World Intellectual Property
Organisation (WIPO) Arbitration and Mediation Centre, which caters for
intellectual property and technology disputes;
·
The Court of Arbitration for Sport (CAS),
which administers sports-related arbitrations; and
·
The Chambre Arbitrale Maritime de Paris
which administers and supervises maritime arbitrations.
These institutions publish rules tailored
to the types of disputes they deal with, and maintain rosters of arbitrators
who specialise in those types of disputes. Most of the major arbitral
institutions (like the ICC and LCIA) do not specialise in this way; the
argument being that there is no need for the institution to be specialised as
long as the selected arbitrator is a specialist, or is permitted by the
institution’s rules to appoint experts and/or rely on expert evidence from
party-appointed experts. Nevertheless, parties may feel more comfortable
dealing with an institution that specialises in its field.
Fast-Track
Arbitration and Early Determination
In a survey of international arbitration
users, 92 per cent of respondents were in favour of the adoption of a
simplified “fast track” arbitration procedure for claims under a
certain value (2015 International Arbitration Survey: Improvements and
Innovations in International Arbitration by the School of International
Arbitration at Queen Mary University of London). Certain institutions provide
for expedited arbitration, which can be on a documents-only basis and before a
sole arbitrator. For example, under the SIAC Rules, the expedited procedure can
be applied for where the aggregate amount in dispute does not exceed SGD 6
million, the parties agree to use the procedure, or in cases of exceptional urgency.
The SCC also has separate expedited rules which the parties can agree to use.
As from 1 March 2017, the new ICC expedited procedure will automatically apply
to ICC arbitrations where the amounts in dispute are below USD 2 million.
Parties can choose to use the procedure for higher value cases. If contracting
parties want to have the flexibility to adopt a fast-track procedure, this
should be taken into consideration.
COMPARATIVE
ANALYSIS OF SOME TOP ARBITRATION INSTITUTES
Various arbitration institutions have their
own system of operations according to various features. Let us look at some of
the top institutions and how they operate regarding the following:
Suitability/particularity, method of
commencing actions, number of arbitrators, appointment of arbitrators,
procedure, timeframe for preparation of award.
1.
Hong-Kong
International Arbitration Centre:
i.
Suitability:International
arbitrations of all types, and is a common choice for transactions involving a
party from the People’s Republic of China.
ii.
Method
of Commencing Actions:By notice in writing to HKIAC and all other
parties.
iii.
Number
of Arbitrators:In the absence of agreement between the parties, HKIAC
decides whether one or three is appropriate.
iv.
Appointment
of Arbitrators:Where there is one arbitrator, the parties jointly
designate an arbitrator, failing which HKIAC will appoint. Where there are
three arbitrators, each party designates one arbitrator and the designated
arbitrators nominate the presiding arbitrator, failing which the HKIAC will
appoint.
v.
Procedure:Subject
to the HKIAC Rules, the tribunal has discretion on how to conduct proceedings
vi.
Timeframe
for Preparation of Award:Save for arbitrations under the expedited
procedures, there is no prescribed time frame for delivery of an award.
2.
International
Court of Arbitration of the International Chamber of Commerce (ICC):
i.
Suitability:International
arbitrations of all types, particularly where the parties come from very
different backgrounds or those where administrative support or guidance is of
benefit.
ii.
Method
of Commencing Actions:By request sent to the Secretariat of the
ICC Court, which then notifies the respondent.
iii.
Number
of Arbitrators:In the absence of agreement between the parties, one,
unless the ICC decides three is appropriate.
iv.
Appointment
of Arbitrators:The parties by agreement or nomination (to be confirmed
by the ICC Court). In the absence of agreement, the ICC Court will appoint the
arbitrators.
v.
Procedure:The
parties may supplement the Rules in their arbitration agreement. Subject to the
Rules, the tribunal has discretion in how to conduct proceedings.
vi.
Timeframe
for Preparation of Award: Six months from the signature of the
Terms of Reference unless the ICC Court specifies otherwise. This is extendable
and the ICC can take the efficiency and expeditiousness of the tribunal’s
handling of the dispute into account when deciding fees. Extensions are
typically granted.
3.
London
Court of International Arbitration (LCIA)
i.
Suitability:International
arbitrations of all types. Often used in disputes involving either a Russian
and/or Common Wealth of Independent States (CIS)related party and/or a party
ultimately controlled by a Russian/CIS entity
ii.
Method
of Commencing Actions: By request sent to the LCIA and the
respondent.
iii.
Number
of Arbitrators:In the absence of agreement between the parties, one,
unless the LCIA decides three is appropriate.
iv.
Appointment
of Arbitrators:The LCIA Court with reference to the methods or
criteria agreed by the parties. The parties can nominate an arbitrator but only
the LCIA Court can appoint.
v.
Procedure:The
parties and tribunal shall make contact within 21 days of notification of the
formation of the tribunal. The parties may agree on joint proposals for the conduct
of the arbitration and are encouraged to do so in consultation with the
tribunal.
vi.
Timeframe
for Preparation of Award: As soon as reasonably possible (the
tribunal shall endeavour to do so no later than three months following the
parties’ last submissions), in accordance with the timetable notified to the
parties and the Registrar.
INSTITUTIONAL
ARBITRATION IN AFRICA
Currently, nearly 100 arbitration
institutions of various sizes and areas of focus exist across Africa.
As expected, most of these institutions
will not earn strong global or even regional reputations. At the moment, at
least, the ICC and the LCIA continue to dominate international arbitration in
Africa, as they do international arbitration worldwide. In a 2018 survey of
almost 800 arbitration practitioners and users by White & Case and Queen
Mary University, African respondents chose the ICC and LCIA as the top two
institutions. The Lagos Court of Arbitration (LCA) ranked as the highest
African arbitration institution, although in sixth place. So, despite the
multitude of emerging African arbitration institutions, most African users
appear to continue to prefer to resolve their disputes primarily under the
auspices of the ICC and LCIA.
The reasons for this are complex and
multi-faceted, though this preference is most likely linked to the ICC’s and
the LCIA’s proven track records and substantial experience, which underlie
their well-established reputations. The emphasis on reputation, recognition and
experience effectively results in a greater weighting towards long-established
institutions. This means it may take a long time before newer arbitration
institutions in Africa can build their own international following and
performance track record.
No matter how high-quality an arbitration
institution’s administration, it takes a long time for that quality to
translate into reputation and then utilization. For example, the Singapore
International Arbitration Centre (SIAC) commenced operations in 1991, but did
not register 90 new cases in one year until 2006. The number of new SIAC cases
increased to 160 in 2009, and SIAC has received a steady inflow of new cases
each year since then, with 479 new cases in 2019.
Recent trends suggest that parties are
increasingly using top African arbitration institutions to resolve their
disputes. According to survey respondents in the School of Oriental and African
Studies (SOAS) Arbitration in Africa Survey 2020 Report, the top five arbitral
centres in Africa are the Arbitration Foundation of Southern Africa (AFSA), the
Cairo Regional Centre for International Commercial Arbitration (CRCICA), the
Kigali International Arbitration Centre (KIAC), the Lagos Court of Arbitration
(LCA), and the Nairobi Centre for International Arbitration (NCIA). CRCICA
had administered a total of 1,385 cases at the end of 2019, including 82 new
cases in 2019 alone. AFSA also has a caseload of approximately 60
international matters in addition to its domestic caseload of about 500
matters.8The caseloads of KIAC, NCIAand the LCA are also growing,
while the MCCI Arbitration and Mediation Centre (MARC), the alternative dispute
resolution arm of the Mauritius Chamber of Commerce and Industry, also remains
a high profile centre. In addition, regional institutions like OHADA’s Court of
Justice and Arbitration are reformingtheir systems to play a more prominent
role as an international arbitration-administering institution. In November
2017, the OHADA Council of Ministers approved an update to the Uniform Act on
Arbitration and the Common Court of Justice and Arbitration Rules to reflect
recent developments in international arbitration practice.
The increase in the number of cases
administered by top African arbitral institutions may be a sign that these
institutions are coming of age and developing their reputations. The growth,
even if slow, of these institutions shows that users are having good
experiences with them, including state-of-the-art facilities11and
well-trained work forces dedicated to the efficient management of arbitration
disputes. Modern, party-friendly rules that cater to users’ needs also reassure
parties that their disputes will be resolved in a fair, efficient and
transparent manner.
MECHANISM;
INTERFACE BETWEEN ARBITRATION AND MEDIATION
The ability of an institute to combine both
arbitration and mediation develops a hybrid process. An agreement between both parties can create
a pathway for a filter process yielding a relationship that can intertwine
mediation and arbitration in a process. That is mediation can take place prior
to the commencement of the arbitral process or after its commencement and vice
versa.
In an arbitration process, the dispute is
settled by an arbitrator which is binding on both parties, while in a mediation
process, the mediator does not make the decision, but guide both parties in
resolving the dispute in a confidential manner and help both sides tackle
difficult subjects. A mediator is a facilitator.
The ability of an
institution to combine both arbitration and mediation process to ensure a
collaborative agreement, there must be a combined use of mediation and
arbitration emerging in a dispute resolution approach inoffering parties a
number of benefits. These include resolving parties’ disputes cost-effectively
and quickly and obtaining a binding and internationally enforceable decision.The
agreement between the parties can acknowledge and provide for a filter process
i.e. a contractual recognition that mediation can take place prior to the
commencement of the arbitral process or after its commencement.
This is done by incorporating
mediation in a tiered dispute resolution clause. The parties can agree that a
mediation will take place at any stage of the arbitration process. This has the
advantage of providing a formal mechanism for resolution of the entire dispute
which statistically has a reasonable prospect of success before moving on to a
more complex and expensive arbitration with the associated disadvantages of
that process. It gives the parties a final opportunity to resolve the dispute
amicably and has positive consequences in terms of the prospect of maintaining
a commercial or other relationship.
However, to date there
has been little agreement on several aspects of the combined use of processes.
The academic debate is ongoing about acceptable ways of combining mediation and
arbitration. At the same time, there is little evidence to suggest that practitioners
actually use a combination of mediation and arbitration. In a recent empirical
study of the current use of mediation in combination with arbitration, the
results reveal that the combined approach is used to a relatively low extent,
which contrasts with widespread recognition of the benefits that it seems to
offer. In vast majority of cases, the mediation and arbitration stages are
conducted by different neutrals, while the mediation stage usually involves the
use of caucuses.
The United Nations
Convention on International Settlement Agreements Resulting from Mediation (the
“Singapore Convention” or the “Convention”) came into force on 12 September
2020. The Singapore Convention is a significant step for international
commercial dispute resolution, enabling enforcement of mediated settlement
agreements among its signatories. For international businesses this means that
they are presented with another viable and effective alternative to litigation
and arbitration in resolving their cross-border disputes, especially during the
global COVID-19 pandemic.
By facilitating a
negotiated settlement between parties, mediation can usually provide them with
a faster, more cost-effective and commercial method of resolving disputes than
resorting to litigation and arbitration. With the aid of neutral and qualified
professionals, mediated settlements focus parties onto what really matters to
them, ironing out their differences swiftly in confidentiality while preserving
businesses’ reputation and their long term relationship. However, until the
Singapore Convention, no harmonised enforcement mechanism existed for these
negotiated settlements. Hence, the only remedy for a party who was faced with
an opponent refusing to honour the terms of such negotiated settlement, was to
bring an action for breach of contract and then seek to have the subsequent
judgment enforced, potentially in multiple jurisdictions. This was an expensive
and inefficient deterrent for parties to even consider mediation for the
resolution of their disputes, so they instead turned to arbitration or
litigation from the outset. Now, the Singapore Convention has the potential to
greatly increase the appeal of mediation as a mechanism of resolving commercial
disputes with a cross-border dimension. The Convention provides parties who
have agreed a mediated settlement with a uniform and efficient mechanism to
enforce the terms of that agreement in other jurisdictions, in the way that the
New York Convention on the Recognition and Enforcement of Arbitral Awards (the
“New York Convention”) does for international arbitral awards.
CHALLENGES
OF THE ARBITRATION INSTITUTIONS
The growing use and evolution of
arbitration has led to a burgeoning number of global and regional arbitral
institutions. Every institution is thus competing to secure, keep or expand its
own share of the arbitration world.
New arbitral institutions have been set up
in places such as Central Asia and Africa.
In November 2018, the Tashkent
International Arbitration Centre (TIAC) was established in Uzbekistan. TIAC
aims to be a viable alternative to arbitrating at Paris or London based
institutions. TIAC’s paradigms of success are cost, efficiency, compliance with
international best practices and top-class arbitrators. TIAC arbitration rules
adopt the latest thinking in arbitration. For instance, the rules enhance
transparency and legitimacy by giving additional powers to arbitrators (e.g.
Articles 10 and 20 of the TIAC Rules).
In Africa, the African Court of Mediation
and Arbitration (CAMAR) was established in April 2019. The Court, aiming to
open new perspectives and a better-organized legal framework, handles disputes
involving states, African companies and multinationals operating in the
continent. Such disputes have thus far been resolved before institutions in The
Hague, Paris or London. As rightly observed by Gregory Travaini, CAMAR “could
well be a contributing step towards the “Africanization” of arbitration”.
The ever-expanding list of new institutions
all over the globe, illustrated by examples above, has provoked strong
competition among the existing and new institutions. Internationally accredited
and well-known institutions, notably in Europe and Asia, have responded with
significant efforts in revising their respective arbitral rules (e.g. ICC Rules
2018 or Hong Kong International Arbitration Centre (HKIAC) Rules 2018).
The surplus of arbitral institutions has
some negative effects. Among others, the perceived efforts to attract users by
offering an increased number of services and tailor it to their own needs may
have a direct impact on the efficiency of the proceedings, which is one of the
key features of arbitration, by leading thus to unnecessary or even unwelcome
delays and costs. A risk of greater concern is that “sham” institutions or even
institutions that have no expertise or resources to administer arbitrations
properly will, in a spill over effect, also harm the profile of established
institutions and international arbitration in general. A recent example is the
18 billion Egyptian pound award administered by the Cairo-based International
Arbitration Centre (IAC), where the Egyptian Criminal Court sentenced to
prison both, the executive director of the IAC, under whose auspices the
award was rendered, and the administrative secretary to the IAC of the arbitral
institution in Cairo, for aiding and abetting the fraud. The question, yet to be
answered, is whether this recent case will have any impact on the caseload of
the IAC in the future.
CONCLUSION
AND RECOMMENDATIONS
The best way for arbitral institutions is
to establish cooperation between themselves and build similar rules. On 19 December
2017, the Singapore International Arbitration Centre (SIAC) launched its
Proposal on Cross-Institution Cooperation for Consolidation of International
Arbitral Proceedings (Proposal). By way of inspiration, AFSA and the Shanghai
International Arbitration Centre have created the China-Africa Joint
Arbitration Centre (CAJAC) in Johannesburg and Shanghai. Other innovative
efforts for cooperation include the Memorandum of Understanding (“MoU’s”)
signed by the ICC aiming to facilitate knowledge sharing and best-in-class
services on this field. More recently, Saudi Arabia’s Centre for Commercial
Arbitration (SCCA) and Dubai International Financial Centre (DIFC) Courts have
also signed a MoU. These “mutual assistance” agreements mark a milestone in the
cooperation and operation of arbitral institutions all over the globe, as they
strive towards harmonization and consistency among arbitral rules. Therefore,
as rightly stressed by Mr. Travaini, it seems that “cooperation would be more
fruitful than dry competition”.
PROFILE
OF MR OYETOLA MUYIWA ATOYEBI, SAN
Mr.
OyetolaMuyiwaAtoyebi, SAN, is a
seasoned Arbitrator and legal expert with expertise in commercial andcross
border disputes,with a formidable level of expertiseand over a decade’s worth of experience in the practice
of Alternative Dispute Resolution mechanisms (ADR).
Drawing on expertise from a technical and
commercial background, he has market-leading and in-depth insight into a range
of industries, and has successfully
resolved and managed several business disputes through efficient,
cost-effective and impartial ways of overcoming barriers at any stage of
conflict.Hehas been
appointed as Presiding Arbitrator and as Member of several panels on countless Arbitral
proceedings. He has served on
both Domestic and International Arbitral Tribunals and he approaches issues with
a clear understanding of the commercial objectives of the different references.
His
outstanding performance has attracted international recognitions and awards. He
is the youngest lawyer in Nigeria’s history to be conferred with the highly
coveted rank of a Senior Advocate of Nigeria (SAN). He is the Managing Partner
of OMAPLEX Law Firm, an established law firm driven by technology
innovation. As an expert in emerging areas of law practice, he has core
competence in Commercial Transactions, ADR ,Intellectual Property, Cyber
Security and Fintech. He is described as the go-to person when it comes to
complex issues that arise in dispute resolution.
1. The
United Nations Commission on International Trade Law Arbitration Rules (as
revised in 2010). Please note that UNCITRAL is not an arbitral institution and
does not administer arbitrations.
2. 2015 International
Arbitration Survey: Improvements and Innovations in International Arbitration
by the School of International Arbitration at Queen Mary University of London.
The survey is available on the QMUL’s website:
http://www.arbitration.qmul.ac.uk/research/2015.
3. See the
2018 International Arbitration Survey: The Evolution of International
Arbitration by the School of International Arbitration at Queen Mary University
of London, which recorded the reasons for respondents’ preference for certain
institutions. The top three reasons were “general reputation and
recognition of the institution”, “high level of administration
(including efficiency, pro-activeness, facilities, quality of staff)”, and
“previous experience of the institution”. The survey is available on
the QMUL’s website: http://www.arbitration.qmul.ac.uk/research/2018.
4. Paragraphs
40-46 of the ICC’s updated Note to Parties and Arbitral Tribunals on the
Conduct of the Arbitration under the ICC Rules of Arbitration.
5. 2015 International Arbitration Survey:
Improvements and Innovations in International Arbitration by the School of
International Arbitration at Queen Mary University of London. Its 2018 survey,
The Evolution of International Arbitration, also reflected this preference,
with increased expedited procedures for claims regarded as one the key
improvements that would lead to greater use of international arbitration across
all industries and sectors. Both surveys are available on the QMUL’s website: http://www.arbitration.qmul.ac.uk/research/.
6. https://uncitral.un.org/en/texts/arbitration