International arbitration: what is it?
To understand what international arbitration is, it is useful to compare it with national legal litigation.
Unlike the latter, international arbitration takes place not before a Court judge but before private judges, better known as arbitrators.
Faster and cheaper, it is the means of resolution for international dispute.
It was created to allow parties with different legal systems and laws, linguistic and cultural contexts, to resolve the dispute that has arisen between them in a definitive and binding way.
How does international arbitration work?
International arbitration aimed at resolving the dispute can be:
- Ad doc "pure arbitration", which sees only the figure of the arbitrator and the parties meeting up, without the intervention of any external body;
- Administered arbitration, in which the parties choose an Italian or international body specialised in the organization and management of arbitration and totally rely on the regulations prepared by it.
There is also an "investment arbitration", created to resolve disputes between foreign investors and host states. For the foreign investor, the possibility of resorting to this type of arbitration is a guarantee since, in the event of a dispute with the host state, he will have access to independent and impartial arbitrators who will resolve the dispute and make an enforceable recognition.
Describing the international arbitration process is impossible, precisely by virtue of its nature, as it is the parties, or alternatively the arbitrators or the body, who determine the rules.
In any case, from the general examination of the rules established by the various arbitration institutions, it is possible to identify general trends, better described below.
First of all, it must be said that, according to the provisions of the civil procedure code, the procedure must be carried out:
1) preserving the autonomy of the parties in establishing the rules of the procedure;
2) ensuring the principle of cross-examination;
3) respecting some principles of procedural public order.
It all begins with the introductory phase; or submitting the application to the office of the chosen arbitration institution, which normally deals with notification to the defendant.
If the latter intends to defend himself, he will have to file his defense statement.
Subsequently, the arbitral institution constitutes the Arbitration Court, considering what is expressed by the parties in the arbitration clause and in the introductory documents, with particular attention to the number and designation of the arbitrators.
Once the Arbitral Tribunal has been constituted, it is customary to proceed with a preliminary meeting, the object of which is a discussion between the parties and the arbitrator.
As a result, the terms of reference is signed, a sort of program with which the subject of the arbitration is defined, the questions are specified and some aspects of the procedure are regulated, such as the language.
The next phase is dedicated to the exchange of documents, defense briefs, the production of written evidence and the indication of the texts for the oral tests.
Here the referee has a more direct approach. Unlike the ordinary Judge, he participates more actively in the search for the truth.
Once this phase is concluded, the conclusions have been specified, we move on to the drafting and deliberation of the arbitration award. If there is more than one arbitrator, the decision is made by the majority. If the majority is not reached, it is taken independently by the President.
As can be seen, international arbitration allows the parties to adapt it to their needs, as long as the arbitration clause is drafted carefully.
What are international arbitration rules?
Most international arbitration institutions have rules governing the resolution of disputes through arbitration.
Among the best-known international arbitration institutions are: the International Chamber of Commerce, the London Court of International Arbitration, the International Dispute Resolution Center of the American Arbitration Association, and the rules of the Singapore international Arbitration Center and the International Arbitration Center of Hong Kong.
Laws Applicable to an International Arbitration
There are several laws applicable to an International Arbitration. These laws include:
1) the law governing arbitration, to be interdicted as the set of national rules governing the conduct of international arbitration. This is almost always the law of the seat of arbitration;
2) the law applicable to the merits of the dispute, which regulates the existence, validity and interpretation of the main contract, as well as allows for the interpretation of any non-contractual clauses;
3) the law applicable to the arbitration agreement, which regulates the existence, validity and interpretation of the agreement itself;
4) the law governing the ability of the parties to arbitrate. As regards legal persons, the law applicable to them is normally the law of the State in which they are incorporated;
5) the law of the place of execution of the arbitration award. According to the New York Arbitration Convention of 1958, an arbitral award that falls within its scope can be applied in almost any jurisdiction in which the losing party owns assets.
In international arbitration it is possible that each of these laws is that of a different state.
And indeed, as mentioned, the parties involved in the arbitration are free to indicate to the arbitrators the procedural rules to follow, as well as the law applicable to their arbitration.
The choice may be reported either in the arbitration agreement or by referring to a pre-established arbitration regulation.
In the absence of choice by the parties, the arbitrator will choose the law applicable to the arbitration procedure, obviously projecting it to that with which the contractual relationship is most closely in contact. In accordance, it may be that of conclusion or execution of the contract, or the law of the country in which the common headquarters of the parties is located.
The choice of parties and arbitrators has only one thing in common: the limit of public order.
International Arbitration: Do you need help?
The Arnone&Sicomo Law Firm has an internal department of commercial lawyers, specialised in the management of commercial disputes in Italy. For years we have been assisting private individuals and foreign companies in international arbitrations, aware that today arbitration represents a valid and rapid alternative to ordinary litigation.
Our international arbitration lawyers in Italy assist their clients in all phases of the arbitration proceedings, from the presentation of the appeal to the drafting of defense briefs, fully discussing the merits of each issue submitted to them.
Our international arbitration lawyers have a broad understanding of foreign cultures and act only after a careful analysis of the law applicable to the specific case, assisted, where necessary, by our interpreters. Indeed, language skills are very important in international arbitration and help us understand the significant procedural differences between country-specific judicial disputes.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.