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Dispute resolution by international commercial arbitration

International commercial arbitration is a dispute resolution method that is recognized and widely applied in most countries around the world. Selected based on speed and high expertise, international commercial arbitration plays an important role in creating a stable environment for international trade exchanges and cooperation. To clearly understand this method, Viet An Law will summarize a general overview of dispute resolution by international commercial arbitration.

History of formation and development of international commercial arbitration

In the world

The international arbitration model appeared in Europe in the 20s of the twentieth century:

  • In 1922, the International Chamber of Commerce (ICC) issued the first Arbitration Rules.
  • In 1923, the ICC Arbitration Court was established. In the same year, the Geneva Protocol on arbitration clauses came into being.
  • In 1927, the Geneva Convention on the Enforcement of Foreign Arbitral Awards was promulgated (predecessor to the 1958 New York Convention).

Modern international commercial arbitration really flourished at the same time as international commercial practices (“traders’ laws”) were formed and widely applied:

  • In 1958, the New York Convention 1958 on Recognition and Enforcement of Foreign Arbitral Awards marked a strong development on a worldwide scale.
  • In 1961, the European Convention on International Commercial Arbitration was born.
  • In 1976, UNCITRAL issued the UNCITRAL Arbitration Rules.
  • In 1985, UNCITRAL promulgated the Model Law on International Commercial Arbitration. This law is applied by many countries, especially developing countries.

In Vietnam

International commercial arbitration was established and operating in Vietnam quite early:

  • In 1963, the Foreign Trade Arbitration Council was established.
  • In 1964, the Maritime Arbitration Council was established.

The above two organizations are the predecessors of the Vietnam International Arbitration Center (VIAC). Up to now, VIAC has been considered a long-standing and prestigious international arbitration center in Vietnam.

General overview of international commercial arbitration

Concept of international commercial arbitration

International commercial arbitration is a method of resolving commercial disputes with international elements based on the agreement of the parties (legal entities) participating in the dispute.

Characteristics of international commercial arbitration

  • Arbitration is a non-state jurisdiction.
  • Arbitration will only proceed when there is an agreement between the parties.
  • Referees have high flexibility.
  • Arbitrators are experts with specialized knowledge in many different fields.
  • The arbitrator’s award is final and binding on the parties.

Types of international commercial arbitration

International commercial arbitration can be classified into:

  • Regulatory arbitration (permanent arbitration) is an arbitration administered by an arbitration institution and subject to that institution’s arbitration rules.
  • Ad hoc arbitration is a method of arbitration to resolve specific disputes, including arbitrators that are requested by the parties, selected, and not limited by the available list of arbitrators. Upon completion of these disputes, the arbitration committee will dissolve.

The provisions of the law applicable to international commercial arbitration

Applicable law in arbitration proceedings

The law applied in arbitration has the role of guiding and guiding the parties on how to conduct the arbitration.

  • Firstly, in principle, the parties are free to agree. This principle has been noted in Article 19.1 of the UNCITRAL Model Law: “According to this law, the parties are free to agree on the procedure to be followed by the arbitral tribunal when conducting the proceedings”.
  • Secondly, the principle of where the arbitrator is located. Article 5 of the New York Convention 1958 recognizes this principle through provisions on the recognition and enforcement of decisions that are refused if “the arbitrator or the arbitral proceedings are not in accordance with the agreement of the parties or, in the absence of such agreement, inconsistent with the law of the country where the arbitration is conducted”.

The law applicable to the substantial dispute

For international commercial arbitration, the issue of determining the law applicable to the content of the dispute between the parties is relatively important because the arbitral award is not only based on the terms of the contract but also on the basis of the contract. The provisions of substantive law are governed by the parties’ disputes.

It would be much simpler to determine the applicable law in the subject matter of the dispute if the parties themselves made the determination of the applicable law. If not, then the arbitral tribunal will do so and the law will be chosen by the arbitral tribunal.

Principles of international commercial arbitration in dispute resolution

Principle of agreement

This is considered a fundamental principle of arbitration proceedings. The main content of this principle is that the arbitration process must take place in accordance with the agreement of the parties on how to appoint arbitrators and the number of arbitrators in the arbitral tribunal.

This principle is widely recognized by national laws as well as international treaties. For example, under the New York Convention 1958, Article 5 provides: “The composition of the arbitrator or the arbitration procedure is not in accordance with the agreement of the parties or, in the absence of such agreement, is inconsistent with the law of the country conducting the arbitration;…” has partly concretized the above agreement principle.

The principle of equality

The basic content of this principle is reflected in the fact that the arbitral tribunal must treat the parties fairly and give the parties sufficient opportunity to present their arguments on the dispute. The purpose of using international commercial arbitration will not be achieved if the parties are not treated fairly before the arbitration.

The principle of equality can be found in the UNCITRAL Model Law on International Commercial Arbitration. Specifically, under Article 18, the parties have the right to request fair treatment and must be given full opportunity to present their case. The provisions of Article 15 of the UNCITRAL Arbitration Rules stipulate that the parties are treated fairly and at any stage of the proceedings each party will be given a full opportunity to present their case.

Principle of independent, objective, and impartial arbitrators

Considered a central principle of international commercial arbitration.

  • The arbitrator’s independence is reflected in the fact that the arbitrator has no direct or related interest in the dispute and is not under the influence of any agency, organization, or individual when settling the dispute
  • The objectivity of the arbitrator is ensured when the arbitrator properly performs the role of a third party, adjudicates right and wrong based on evidence, documents, and details of the case, and makes a decision in accordance with the law.
  • The arbitrator’s impartiality is demonstrated when the arbitrator does not express an opinion against one of the disputing parties or the outcome of the trial.

The principle of arbitrator independence is specified in Article 11 of the UNCITRAL Model Law on international commercial arbitration: “No one can be prevented from becoming an arbitrator by reason of nationality, if the parties do not have any other agreement”.

Principles of keeping the content of the dispute confidential

This is considered the obligation of the arbitrator when settling the case. This principle is reflected in the fact that no outsiders will be allowed to participate in the arbitration hearing without the consent of the parties.

The principle of confidentiality is recognized in the UNCITRAL Arbitration Rules in Article 25, according to which the dispute resolution meeting will be held in secret unless the parties agree otherwise. The arbitral tribunal may require any witness or witnesses to withdraw during the examination of other witnesses.

Above are the general contents of current dispute resolution by international commercial arbitration. If you have any questions about commercial arbitration law or civil law, please contact Viet An Law Firm for our best support!

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