Arbitral Awards: Arbitration Act of 1996 Essay

Arbitration awards and their enforcement in other countries and how UK

Law of arbitration 1996 is helpful.

Commercial arbitration, whether nationally or internationally highlights not only the existence of many controversies in international commercial transactions but also represents the ways in which these conflicts of interest can be resolved. It is no doubt a competitive industry which is revealed in its laws, statutes and awards. (Drahozal, 2000) However the implementation of arbitral awards varies according to developed and developing states. Usually the awards work along with alternative dispute resolution (ADR) depending upon the country’s policies and development infrastructure.

Arbitration according to every Arbitral law is deemed to protect and maintain the privacy and confidentiality between the parties, thereby settling down the dispute between two parties. The most obvious benefit of using arbitration is that awards are easier to enforce as compared to the traditional court proceedings. However despite lacking any particular statutory, the law of Arbitration 1996 generally considers privacy and dispute resolution as part of the law. An ‘award’ is associated with arbitration when all claimants’ claims do not meet the law.

Arbitration Act 1996

The New English Arbitral Act 1996 affect disputing parties in such a manner that they are able to reserve their confidentiality on a legal basis. According to the English Arbitral Act, the award is dealt separately in the light of legal rights of a third party to protect the agreement. (2007a) UK Arbitral law 1996 is useful in the sense that it provides full confidentiality not only to the conflicts but also to the legal proceedings in the court room. This reserves the right and obligation on the part of the documents or material that are used in award arbitration, not to reuse again. Therefore it protects the legal rights of the proceedings and in this manner every dispute is dealt with strict confidentiality.

Advantages of Arbitration Act 1996

Apart from being useful, in serving to resolve the conflicts within the two parties’ management relationship, it rivals strike activity and surpasses court litigation as a cathartic outlet for frustration, emotion, and discontent. As a less formal mechanism of dispute resolution, the parties can say things and introduce evidence that would not be tolerated within the formal structure of the court system. Even the parties are exposed to maximum freedom under 1996 Act if they are willing to resolve their conflict personally.

Fair Resolution minimising delays and expenses

Section 33 of the Act 1996 states that tribunal shall provide each party with fair means and opportunity to put his case. Similarly the Act condemns the tribunal for adopting procedures that avoid unnecessary delays and expenses (Stoppi, 2001, p. 35). A procedural requirement for a party to bring a successful suit against his or her union for failure to fairly represent concerns time limits.

Awards initiation takes up to six-month time limit for the courts. Award initiation provides the parties with some measure of protection from large back pay and damage awards. For example an employee cannot lay back and wait several years before filing in the hope of achieving what amounts to a paid vacation. So, he would suit for breach of fair representation which must be filed in a timely fashion within six months from time of the breach’s occurrence.

Awards are beneficial in alleviating unnecessary prolonging of continuances and stay that act as the threshold to delay the hearing or the appearance of one of the parties. It is not uncommon for a party to face obstacles weather conditions, illnesses, and a variety of other circumstances that would make attendance at a scheduled hearing impossible or unfair. Neutrals have their own requirements and preferences, but, in general, if there is good cause clearly out of the moving party’s control, and there is no statutory prohibition against the continuance or stay, the award will be granted. Similarly, if an unanticipated argument or piece of evidence is introduced, the neutral may grant the surprised party a continuance.

No duplication

Arbitration awards (1996 Law) prohibits reuse of the awards or the documents being used in awards. Before 1996 Law, it was not uncommon for the parties in an arbitration case to ask that the neutral accept case citations as a portion of the closing argument. This was a generally accepted practice. Most neutrals used to accept not only case citations but copies of entire arbitration awards or court decisions. These were entered to provide the neutral with the benefit of other neutrals’ reasoning concerning similar issues. The new law has changed this concept.

Clarification of an Arbitration Award

The clarification of an award gives the opportunity to request for an explanation of a portion of the award believed to have an uncertain meaning, or a correction of a portion believed to be in error. (Dilts, 1990, p. 62) This clarification provides ease of an additional word on the inclusion or otherwise of reasons in the award. If legal advisers represent the parties, it is almost certain that they will make a request for the arbitrator to state his reasons for making his award (not necessarily ‘reasoning’). Under the various Caribbean arbitration acts there is no such obligation imposed on him to do so. The only obligation would be if he was requested to do so before or during the hearing and he consented. By far the safest practice and one designated to avoid the need to debate the issue of ‘reasons or no reasons’ is to state clearly, in the arbitration agreement, the course the arbitrator is to follow when ultimately publishing his award. (Stoppi, 2001, p. 126) Although not required by law in the Caribbean, the English Law of 1996 does require that the award shall contain the reasons for the award unless it is an agreed award or the parties have agreed to dispense with reasons.

Flexible Dispute Resolution

Arbitrators, like judges, are requested to settle commercial disputes so that the parties can settle their obligations one to the other based on their award. Therefore it is the reward which decides whether to create a legal or even technical precedent or will it ever be used for further arguments. An argument then in favour of not publishing a reasoned award is to prevent the opportunity of an unsuccessful party to challenge the award, since the absence of reasons enhances the certainty and finality of an award. A reasoned award is that which assist the parties in understanding the nature of the award, however still the decision to provide reasons or not is the arbitrator’s.

Arbitration Costs

In the matter of awarding costs, the arbitrator has no choice but to strictly conform to the applicable law. Failure to properly do so may result in the award being remitted to him by the court. Even in this situation the award provides opportunity to challenge the award legally. ‘The cost of the reference’ means all costs properly incurred by the parties in the course of all the arbitral proceedings. These also include costs of the arbitration incurred by the arbitrator and authorised by the parties, such as costs of joint site visits, translators, accountants, or other experts hired by the arbitrator to assist in the course of the arbitration. ‘Costs of the award’ refers to the arbitrator’s fees established by consent at the beginning of the arbitration plus his out-of-pocket or reasonable reimbursable costs.

In some pieces of legislation, the arbitrator is required to ‘tax or settle’ the costs of the arbitration. This simply means that he must ensure that the costs submitted by both sides are reasonable, fees charged are not excessive and expenses have been reasonably incurred for the benefit of the arbitration.

Security for Costs

There is no specific provision in any of the regional acts for the court to deal with an application for security of costs, either those of the respondent in defending the claim or claimant’s costs in defending a counter-claim. This has been amended in the English 1996 Arbitration Act at section 38(3) stating that the tribunal has the right to order a claimant for the security costs.

Reparation in Adequate form

International law suggests that any engagement between parties enforces obligation to compensate the damages or make reparation in proper form. However, reparation is not necessary but in accordance with the mutual consent of the parties. Poland suggests that compromiser clauses should be narrowly interpreted so as to exclude claims for reparation unless express provision was made for these was dismissed by the Court as not supported by earlier arbitral practice nor by any recent developments. For although some international arbitral tribunals were expressly given the power to decide on ‘claims for pecuniary compensation’, many more were only authorized to settle ‘all claims’; not surprisingly the latter saw nothing to prevent their fulfilling what were obviously the intentions of the parties and making awards of damages. Even stronger evidence against the Polish argument may be drawn from those individual arbitrations where the arbitrator was expressly required to decide only the question of responsibility and where no reference was made to remedies. (Gray, 1990, p. 60)

Arbitration in the U.S.A

United States has not necessitated arbitration, however the parties when agreed to be bound by the decision of a neutral third party whom they have selected always select the arbitrator, whether a permanent umpire or an arbitrator selected ad hoc. In either case, the parties either agree they have faith in a particular arbitrator, or they have selected the arbitrator by striking the most unacceptable from a list provided by an administrative panel. If arbitrators were not neutrals capable of conducting a hearing and writing a decision based on the record of evidence, the parties would quickly determine that arbitrator to be deficient. The best arbitrators gain wide party acceptability and survive the test of the market, and those who do not gain party acceptability fail and become advocates, judges, or college professors.

Article 2 of the Uniform Commercial Court (UCC) is implemented in all states of the U.S except Louisiana and highlights almost all the commercial norms. The UCC permits the court to examine and resolve all the commercial practices so as to finalise its decision (Drahozal, 2000, p. 79). To say that arbitrators simply weigh the record of evidence and provide an objective determination on the merits of each case is therefore not a tribute to those who enter the profession, but it is a tribute to the market selection process that retains the capable and dismisses the less capable. The arbitration market provides the parties themselves with ultimate control over the process. Arbitrators that provide good service, fair awards based on the contract, and well-reasoned opinions become acceptable (Dilts, 1990, p. 103). Through New York Convention (84) it is easier to enforce arbitration awards anywhere in the world.

Africa

The arbitral process in Africa is little developed and not implemented on local level. One reason arbitration is little developed in Africa may be the predominance of the government and its instrumentality in business and economic life of most states (Asouzu, 2001, p. 30). However, the other remaining which is implemented consist mostly those arbitration laws that are followed in Africa and ensures making provisions in the arbitration by national courts. (Tiewul and Tsegah, ‘Arbitration’, 395) In Constitutive Act of the African Union, commercial arbitration acts as an independent judiciary and is not dispensable with the other merits of arbitration, such as confidentiality, convenience, procedural neutrality, forum predictability and reliability in yielding effective and internationally enforceable arbitral awards (Asouzu, 2001, p. 43).

Parties that require a legal obligation and want to settle their disputes rarely opt African cities for international arbitration. This is evident from the decision of international arbitral institutions or arbitrators, they never prefer arbitration. Even award creditors avoid African courts and like international investors and traders are reluctant to take proceedings before most African courts.

An arbitral award is escorted by the Bermuda Act (section 20) of the 1998 South Africa draft International Arbitration Act (section 13). The award requires a settlement agreement in writing in accordance with Articles 35 and 36 of the Model Law. The South African provision operates for the enforcement of settlement agreements in South Africa. The provision is not restricted only to settlement agreements entered into in South Africa; a settlement between parties to an arbitration agreement outside South Africa is covered and could be enforced in South Africa. Until the appointment of arbitral tribunal, the South African provision continues with its’ efforts. It is on the occurrence of the latter, that the settlement could be made an award on agreed terms capable of enforcement as an award outside South Africa (1998 SALC Report).

The general response of most developing states to international arbitration partly stemmed from their general attitude towards aspects of customary international law which, they argued, did not fit into an expanded world community. Despite realising the unawareness of African courts unsuitability for the settlement of investment disputes or for the enforcement of arbitral awards since they could be subjected to political pressures and would not decide a case or enforce an arbitral award against African governments, (Asouzu, 2001, p. 35) laws are seeking ways to necessitate arbitration awards in African community.

References

1. 2007a.
2. Asouzu A. Amazu, (2001) International Commercial Arbitration and African States: Practice, Participation, and Institutional Development: Cambridge University Press: Cambridge, England.
3. Dilts A. David, (1990) The Arbitration of Rights Disputes in the Public Sector: Quorum Books:London
4. Drahozal R. Christopher, (2000) “Commercial Norms, Commercial Codes and International Commercial Arbitration” In: Vanderbilt Journal of Transnational Law. Volume: 33. Issue: 1. p. 79
5. Gray D. Christine, (1990) Judicial Remedies in International Law: Clarendon Press: Oxford, England.
6. Stoppi M. J., (2001) Commercial Arbitration in the Caribbean: A Practical Guide: University of the West Indies Press: Kingston, Jamaica.
7. Tiewul, S. Azadon and Tsegah, Francis A., (1975) ‘Arbitration and the Settlement of Commercial Disputes: A Selective Survey of African Practice’
8. 1998 SALC Report, paras 2.91–2.92. By contrast, s. 60 of the Uganda Act, by equating arbitral award and settlement agreement, might have the problem of international enforcement of the settlement.