Arbitration Law: Comparing United States and Saudi Arbitration Law
Table of Contents
I. Introduction 2 II. Saudi Arabian Arbitration System 3 A. Cultural & Religious Context of the Saudi Arabian Arbitration System 3 B. Contemporary Saudi Arabian Arbitration Law 5 C. Frequency of Arbitration Use in Saudi Arabia 6 III. United States Arbitration System 8 A. Cultural & Religious Context 8 B. Contemporary United States Arbitration Law 9 C. Frequency of Arbitration Use in United States 10 IV. Advantages of Each System 12 A. American Arbitration System 12 B. Saudi Arabia Arbitration System 16 V. Disadvantages of Each System 17 A. American Arbitration System 17 B. Saudi Arabia Arbitration System 20 VI. Which is preferable for resolving conflicts between United States and Saudi Companies? 21 VII. Alternative Dispute Resolution Options 22 VIII. International Arbitration Courts 27 A. International Chamber of Commerce (ICC) 29 B. London Court of International Arbitration (LCIA) 31 IX. Conclusion 32 X. References 34
I. Introduction
The process of arbitration has become among the major alternative dispute resolution practices that are frequently employed by commercial organizations. This paper will analyse the situation of arbitration processes in the Kingdom of Saudi Arabia and the United States of America. These two countries have proven to be among the major participants in the international trade particularly with regards to trading petroleum products all over the world. It is thus the intention of the paper to consider the ways in which corporations from both countries can use processes such as arbitration to resolve disputes between them.
The first part of the paper will be covering the Arbitration System of the Kingdom of Saudi Arabia. Under this heading, specific discussions on the cultural and religious context of the country’s legal system which will serve as a precursor to the discussion on the current laws in the Kingdom. Similarly the frequency of use of arbitration will be provided in this part of the paper. The second part will cover the arbitration context of the United States. Similar to the previous part, the cultural basis and the current laws available in the country will also be given along with frequency of use of arbitration. The third part will cover the advantages of both systems of arbitration. The said discussion will be based primarily on the prior descriptions of the arbitration and legal systems. Subsequently, the fourth part will be covering the particular disadvantages of the arbitration systems of US and the Kingdom. In considering these, the author will be providing an analysis on what system would be preferable with regards to the two systems. This will constitute the fifth part of the paper. In addition, the paper will also present several alternative dispute resolution methods that the US and the Saudi companies could employ aside from arbitration. The seventh part of the paper will be discussing international arbitration courts. Moreover, a couple of courts that disputing US and Saudi Arabian companies could hire will be discussed as well. At the end of the paper, a conclusion will be provided relating to the overall arguments and discussions made in this report.
II. Saudi Arabian Arbitration System A. Cultural & Religious Context of the Saudi Arabian Arbitration System
The context of legal arbitration in the context of the Saudi Arabian region rests largely on the Islamic laws and jurisprudence. A major part of the legal system of the said kingdom has originated in principles of Islam in general. Nevertheless, as early as the 1600, the said legal system has displayed several attributes comparable to arbitration and other alternative dispute resolution techniques. Gerber noted the authority presented by seyluislams (chief jurisconsult) of the Ottoman Empire as among the features of the said period wherein the Islamic system have displayed features of alternative dispute resolution. 1999) In a more specific note, he stated that the authority of such jurisconsults was frequently employed as a major “recourse” for the public to avoid any court proceedings.
In general, the system of laws practiced in the Islamic context is predominantly based on faith. To this part of the discussion, the concept of Shari’a comes into the picture. Although there is no integrated concept in the Islamic laws in the Middle East, principles and commandments based on the religious teachings of the prophet Muhammad as stated in the Holy Book, Quran, and the Sunna reflect these tenets. It is in these religious concepts that the practice of arbitration in the said country has been established. In the work of (1950) they stated that the sunna “insisted” on the practice of negotiation and arbitration in dispute resolution. This is among the first account of such espousal of the said procedures in the Islamic context. It is also established in their work that the practice of arbitration has dated as far back as the first descendants of Muhammad, the caliphs of Medina, which then established the Islamic legal system and Arab customary law. 1955, )
Though, there is not much of actual data with regards to the details of the arbitration processes in the Islamic legal context, it had been noted that the system of arbitration has been used to resolve a lot of disputes. The notion of disputes here are not only limited to commercial or in terms of business. The practice of arbitration has also been used to avert any possibility of war involving the different Arab societies at that period. ( 1955, )
B. Contemporary Saudi Arabian Arbitration Law
As stated in the earlier parts of the paper, the law implemented in the Kingdom of Saudi Arabia is largely anchored on the Islamic laws. With this high regard with the Islamic laws, it is inevitable for the said legal system to adhere to the principles presented by the Shari’a Courts. Historically, merchants are at the mercy of these establishments and institutions whenever they come across disputes with other business folks. At the current setting, the Kingdom of Saudi Arabia has a modern take on the conduct of justice. Though most of the principles still come from the faith-based legal system, the kingdom has instituted a Board of Grievances where disputes in the context of labour and business are handled. Specifically, issues involving bribery, forgery and trademarks are among the focus of the said government body. The Board of Grievances is under the supervision of the Ministry of Justice which oversees the general conduct of criminal and civil concerns in the Kingdom. All of the disputes heard in the context of arbitration have the possibility to be referred to autonomously and are not subject to any form of legal precedent. ( 2003,)
Given the fact that Saudi Arabia is internationally viable in terms of business, affairs with other nations and other international organizations are inevitable. This served as an impetus for the government of Saudi Arabia to install several rules in its arbitration system. (, 2006) This has triggered a great boot in the employment of arbitration clauses in business contract throughout the country. ( 2003,) As a result, instead of going straight to the Shari’a Courts, the business sector is able to address their dispute through arbitration. To this end, the business sector of Saudi Arabia is also subject to the benefits of the implementation of arbitration practices as opposed to litigation processes in Shari’a Courts.
C. Frequency of Arbitration Use in Saudi Arabia
Saudi Arabia and the United States are affiliates and signatories to the Washington Convention on the Settlement of Investment Disputes ) involving states. ( 2000, ) This look after conciliation and arbitration as a way of binding resolution of investment conflicts involving states who are affiliates and signatories to the Convention or their component subdivisions or organization on the one hand and nationals of other contracting nations.
As stated in the previous part of the paper, the Kingdom of Saudi Arabia has ratified its Arbitration Regulations. This part of the paper will look closely into the said regulation to clearly understand the condition of arbitration in Saudi Arabia. To illustrate, Article I of the Regulations states that arbitration may be chosen by parties as a method of dispute resolution in a particular existing disputes. It may similarly be decided by the parties to a contract to arbitrate any disagreement arising under that contract. ( 2006) Article I authorize arbitration by and large as a method of dispute resolution and do not confine arbitration to business issues. This means that the government of Saudi Arabia acknowledges that the effectiveness of the process rests on the compliance and the actual agreement of both parties to resolve the actual dispute based on the contract that they made.
Similarly, Article II of the Regulations does impose a limitation on the availability of arbitration by stating that arbitration is not suitable in issues where conciliation is not allowed. , 2006) Such issues, as simplified by the Implementing Rules, are commonly speaking, criminal acts, whether or not exposed to the Qura’anic castigations, subjects of public and administrative law and civil status, appropriately set aside to the state, and issues with reference to inheritance, and specific marital disagreements.
Although there is a scarce amount of data pertaining to the actual number of arbitration proceedings that have taken place in the Kingdom of Saudi Arabia per year. It has been established in the earlier discussions that the system of arbitration is indeed a part of Islamic culture as it is based on their faith. It has been employed as a dispute resolution process in the time of Muhammad and practiced by his descendants. It ahs also been established that it was used as a means to deal with not only of the commercial context but also involved actual warring parties. At the current stage, the process now involves parties in dispute with labour, family, and other contractual disputes. To this end, it is possible to heed that arbitration has greatly been used in the Saudi Arabian setting throughout the years of existence of its legal system.
III. United States Arbitration System A. Cultural & Religious Context
Arbitration had been practiced as a type of dispute resolution ever since the colonial era, however it was not as accepted then as it is today. ( 2003) The beginnings of arbitration can be established in English common law and regrettably, a number of the similar imperfections and shortcomings that subsisted in England were transferred to the United States. The context of arbitration in the United States seems to stem from non-religious aspects, yet are highly adherent to a more just and legal system. The principle stating that arbitral agreements outside the courts of authority were the most damaging predicament. 2005, ) This means that courts in the earlier centuries shunned any form of procedure outside the jurisdiction of the courts. The results of this outlook can be perceived in an early sixteenth century decree that banned agreements excluding court cases. In addition, the 16th century court judgment identified as Vynior’s Case 8 Co. 80a, 81b 1609) instituted a leaning that arbitration agreements were revocable by either party at any instance before the award, relied on the idea that the arbitrator was the instrument of both whose power could be cancelled or annulled at any instant. (2000, )
B. Contemporary United States Arbitration Law
In an attempt to prevail over years of antagonism, a pro-arbitration reorganization movement was created in New York. The New York Chamber of Commerce as well as the New York Bar Association united and petitioned on the state parliament to ratify a legislation that would make arbitration a feasible and practicable types of dispute resolution both prior to and subsequent to an emergence of a dispute. , 2000,) The outcome was the 1920 New York Arbitration Act, which authorized agreements before the emergence dispute, stayed court measures awaiting arbitration, and banned revocation of concurrences to arbitrate. ( 2000, ) Several years after that, the Congress pursued New York’s direction and ratified the Federal Arbitration Act (“FAA”) with the intention of making arbitration agreements compelling, irreversible, and enforceable. ( 2001,) The bill was ratified effortlessly in the both House and the Senate. The FAA tries to place arbitration agreements upon the similar level as other contracts. It advances this objective by permitting a party to petition a federal district court to force arbitration, to assign and employ an arbitrator if one has not been selected, and to implement an award.
C. Frequency of Arbitration Use in United States
Though unlike the faith-based legal system of Saudi Arabia, the arbitration system in the United States have been established for several centuries counting the duration of the occupation of the English settlers in the land. Though there has similarly been a scarce amount of actual statistics pertaining to the current use of arbitration in the country, a report of (1997) noted the statistics provided by the American Arbitration Association stating a 3,075 number of mediations with an 88% settlement rate in the said proceedings. In the similar report, it noted that in 1996, the settlement rates in counties of San Diego and Los Angeles California revealed 41% and 32% settlement rates in mediation proceedings respectively. Though these are not representative statistics of the entire United States, the presentation of such data provides the proof that the country has been employing such practices in disputes. Moreover, it also shows that there has been a considerably high settlement rate in the said statistics which denotes the possible effectiveness of such alternative dispute resolution methods.
And as it was stated earlier, the said country has the concept of mandatory arbitration. According t(2001) the concept of mandatory arbitration has been in use in the “long honourable history” of the country. This means that the businesses are greatly obliged by law to take on arbitration proceedings before they actually take their case on the courts. The said author has also claimed that there was a comprehensive support of this binding arbitration in the “last fifteen to twenty years.” (2005,) To this extent, arbitration bodies in the United States have been emerging to serve as impartial third parties to these disputes. Among these institutions includes the American Arbitration Association (AAA), National Arbitration Forum (NAF), and Judicial Arbitration and Mediation Services, Inc.. ( 2004,)
IV.Advantages of Each System A. American Arbitration System
Among the numerous benefits of commercial arbitration in the United States, flexibility is chiefly influential, particularly in contrast to the traditional, sluggish, public and costly character of court proceedings., 2004, ) Arbitration permits the parties much superior prudence in making a decision on the form their affairs will take. Parties can decide the extent of formality, the arbitrators and their number and where the arbitration will happen. In court actions formal process have to be monitored by all concerned, on pain of being assumed in contempt of court or risking the party’s case. This is frequently not attractive to commercial parties who are expected to prefer the issue resolved with the smallest amount of commotion. Nonetheless, this is not to claim that arbitration measures are totally informal and actually a lot are carried out in a similar way to court actions along with opening speeches, witness assessment and cross examination. The difference is that the parties do not have to pursue the firm rules of evidence of the courts unless they decide to. ( 2003, )
The selection of arbitrators can similarly accumulate huge advantage to the parties in arbitration proceedings in the US. 2000,) In the courts parties cannot select their judges and may possibly lose out if they have chosen one who is indifferent or disinclined to grapple with technological concerns. The parties can select any natural or legal individual who has a wide-ranging contractual capability as an arbitrator on condition that they are unbiased and psychologically competent. This permits the parties to select someone acquainted with their business who will be capable of creating an appropriate and helpful award. If the parties desire they can ask for Judge Arbitrators who can command the arbitration award to be imposed as a decision of the Court. The parties can similarly have admission to organizations that can employ arbitrators, offer amenities for arbitration and double as administrators. Moreover, the parties have immense hold over arbitrators and can order their extent of discretion and conditions under which they can be eliminated. This can similarly be seen as a drawback of arbitration as the arbitrator’s authority can be restricted. ( 2003, ) Arbitrators possess no coercive authority and cannot implement all the remedies accessible to the Courts. Consequently the parties can make an arbitrator similar to a mediator if they want.
Moreover, even though courts cannot intercede on their own proposal, they can be requested to intervene and require attendance of witnesses, creation of documents and other acts which arbitrators cannot carry out. 2004, ) Sanctions can be imposed in opposition to disobedient parties by means of Peremptory Orders. These can be given when a party is not successful in doing something essential for the appropriate and speedy performance of the arbitration, like declining to supply documentation. Sanctions can take account of an unfavourable order for costs acquired, depicting unfavourable evidential inferences from disobedience, proceeding to an award on the foundation of existing materials and finishing the arbitration. ( 2004,)
In addition, the speed of arbitral measures is an advantage over the delays likely in courts as parties are not caused to experience court time accessibility and can proceed the moment the parties have decided to proceed. It is similarly lawfully valid to take account of time limits in arbitration agreements even though these can be lengthened or dismissed if they are believed to be unreasonable. The courts expand time limits where it is just to do so, if unexpected conditions take place or one party acts unreasonably.
Arbitral judgments are not only speedy but also final as the award is obligatory and only subject to very limited appeal. ( 2000,) Then again, the swiftness of arbitration can save money through much briefer hearings which decrease the fees remunerated to the partakers. The knowledgeable nature of selected arbitrators boosts the probability that awards will be consistent with industry or local convention and decreases the risk of runaway awards or awards not in compliance with the recognized exercise or law. Arbitration agreements can similarly lock up the parties’ conflict to a single type lessening the cost and vagueness brought about by corresponding proceedings. In addition, the courts typically only carry out procedural reviews and are extremely unlikely to review the essence of the judgment. Similarly, arbitration awards are required to be reasoned, unless the parties demand that the arbitrators convey a reasoned award. 2004, ) Arbitration awards are then registered in courts permitting the winning parties to make the most of the court’s processes for the enforcement of decisions. A lot of business parties value the conclusiveness of such a verdict as it permits them to establish future business schemes on their award.
Arbitration similarly steers clear from the public character of court proceedings. 2000, ) Parties can manage the degree of confidentiality of their arbitration and only permit the attendance of such individuals as they deem essential. The proceedings are usually carried out in private and press and public knowledge is only authorized by party concurrence. This degree of confidentiality is a requirement to businesses that have trade secrets and standing to guard. Conversely to many parties the most influential benefit of commercial arbitration is party and arbitral independence. There are no obligatory statutory or common law regulations governing the manner in which arbitration should be carried out. ( 2000,) The position of law is that only a small amount of regulation is necessary and that judgments have to be carried out by the parties and the arbitral tribunal. It similarly observes the tribunal as the master of its own process and claims that judicial interference has to be kept to a bare minimum. This independence is very appealing to business parties, who prefer to be up to speed of their own fortunes, as it permits the parties to institute their own strictures for resolving conflicts. It similarly denotes that the award decided will almost certainly be more appropriate to the commercial field.
B. Saudi Arabia Arbitration System
The strengths of the arbitration system established in the Saudi Arabian setting is anchored on the underlying principles to which the said system is actually built. As it has been constantly noted in this paper, the legal system of the said country is based on faith and principles noted by their religion. This means that it would be easy for parties to arbitration to act on certain principles since it is anchored on certain tenets of the social and religious context of the country. As being a system based on religion, this means that the principles that the system adheres to has exited for several centuries. The judgements of arbitrators more often than not are based on doctrines as old as the Quran. Verdicts and settlements are anchored on principles that have been tested for centuries, since the time of Muhammad. Moreover, being predominantly based on the context of the Quran and other Islamic doctrines, the proceedings would conceivably revolve around the presentation of evidence and the merits of the case. To this end, it is the commission of the arbitrators to find fault and wrongful action on the said case. It appears very basic given that both of the parties are involved in the same social context. The emergence of a different perspective on such system would probably complicate matters, especially when the outsider party felt that they were dealt with in a biased proceeding.
Moreover, a claiming party in this juncture may well be favoured. Given the arguments and discussions above regarding the basis of the said legal system, it could be assumed that an aggrieved party will eventually acquire what is rightfully theirs. It is the commission of the arbitration process in the Saudi Arabian context to establish what is fair in as revealed by merits of the case. The institution of rules and guiding principles has similarly increased the credibility of such proceedings in the said area.
V. Disadvantages of Each System A. American Arbitration System
This is frequently incorporated in a general contract in a particular clause. A stay of legal proceedings is approved to permit resolution of the conflict by means of arbitration devoid of the involvement of the courts. This more private method is frequently favoured by commercial parties and emphasizes one innate benefit of arbg, 2003) Nevertheless, as with all alternative dispute resolution processes, there are drawbacks which show the flaws of successful systems. The existence of an arbitration clause is one such disadvantage. Such a clause in a long-standing contract needs a lasting pledge for a lot of parties and this can be intimidating and off-putting particularly if alterations in the future are deemed., 2000,) An institutional policy backing up arbitration similarly needs alterations in the view of executives and counsel and this alteration is not constantly well-received. Whereas this type of long standing relationship can put up a connection of trust involving parties and reinforce their business bonds, particularly if they are aware that court action will not be the consequence of every conflict.
The parties can make an arbitrator act as a mere mediator but this is partially remedied by the function of the courts as a support mechanism for arbitrators and partial arbitrator legal responsibility. Arbitrators are not legally responsible for their decisions unless they were made in bad faith, which is usually deemed to be acts of actual malice, and this defence broadens to their staff. 2000,) Arbitrators are similarly not legally responsible for implied contractual conditions, like reasonable care and skill. Up to now there have been no cases in point in law where an arbitrator has been established to be legally responsible for negligence.
Moreover, there is also the absence of any form of precedence. Arbitration awards are usually not reported and may merely be employed in other measures only under the values of res judicata and collateral estoppel. (. 2003,) The awards similarly function in personam and can reveal issues as they cannot bind or be imposed to the general public.
Final advantage of arbitration is the cost it involves. ( 2004,) This matter is a little vague as the price of arbitration differs depending on the dimension of the conflict and where it occurs. It has been considered that in small to medium sized conflicts the costs of arbitration are alike or below court proceedings, nevertheless in bigger disputes the costs surmount those of a court case. Even though court prices can be soaring, arbitration has a lot of concealed expenses. They take account of the arbitrator’s and experts’ expenses including hotel, room rental and travel charges and minor court payments. These can differ depending on the quantity of arbitrators and the extent and difficulty of the hearing. Thus, in this context, if funds are a problem or the parties desire to set a precedent; court measures will be more attractive.
B. Saudi Arabia Arbitration System
Based on the discussions above, the basic attribute of the legal system of Saudi Arabia which appears to be among its strengths seems to be among its major weakness as well. Being a religion-based system, the interpretation of principles may possibly be caused to undergo subjective judgment. This means that the doctrines acquired from age-old passages from the Quran or other Islamic principles have the propensity to be interpreted to favour one party over the other. To this end, international disputes among multinational companies may have trouble adapting to this kind of arbitration system.
In keeping with that argument, given that the legal system is closely linked to the religion of the state provides an impression that there is indeed an absence of the doctrine of the separation of church and state. This means that any case may well be converted from the legal sense to a more political context if a superior commercial entity or influential unit is compromised. This inevitably provides any party to a dispute the susceptibility to any doubt with regards to the results of the arbitration, regardless of the religious doctrines or principles employed in the decision.
VI.Which is preferable for resolving conflicts between United States and Saudi Companies?
The seat of arbitration can be extremely important. The seat does not essentially denote the location where the arbitration occurs but just the legal system the arbitration is put through. (, 2003, ) Frequently an international seat can be helpful to parties because of the features of the selected legal system and likely discrimination in a local situation. An international arbitration can similarly benefit impartiality principally if the seat is neither of the party’s domestic location. An international resolution can decrease the problems that are frequently come across in implementing national court judgments overseas. Arbitration can rectify a lot of the observed troubles of court proceedings. The possibility of existing bias on the arbitration process when done in a particular location favourable to one of the parties involved compromises the credibility of the process. To this extent, it is more preferable to address the situation in a more impartial seat, particularly in the international context.
On a more basic note, it is preferable for conflicting companies form the US and the Kingdom of Saudi Arabia to arbitrate on an international level. Although the United States may reveal a wide range of ADR methods as well as an established arbitration, choosing it as a seat of arbitration when one of the parties residing on the said nation would make the decision of the arbitrators open to doubt and charges of impartiality. For multinational corporations, doing arbitration processes in the Saudi Arabia may pose a considerable hindrance on them. This is because the arbitration methods in the said country are largely based on Islamic law. The decisions and judgements that may be provided in this context may well be based on the systems of Shari’a principles, the Sunna, and the Quran. ( 2002) To this end, the principles in which the judgements in this context may be considerably subjective to the parties involved. Thus, if there is any possibility of having one of the parties unsatisfied with the result of the arbitration, then the purpose of arbitration is well defeated.
VII. Alternative Dispute Resolution Options
Alternate Dispute Resolutions are very functional in resolving an extensive variety of issues. The most important characteristics of ADR are that it permits for privacy and confidentiality, averts harmful of relations, decreases costs, saves time, and the ending solution is by and large advantageous to all concerned. As to a greater extent of litigants find out on a daily basis, litigation is frequently an unproductive and wasteful means to resolve conflicts and the final judgment depends in the hands of a third party whose judgment may not convince either party. ( 2000, )
Moreover, litigation does have its benefits over ADR nevertheless. Litigation permits for complete and absolute discovery, definitive verdicts on troubled fields of law and a complete appeal procedure. No means of dispute resolution is ideal and they all possess their benefits and drawbacks. In general, ADR is sensible as it has more benefits than drawbacks and has much lesser unconstructive effects than does litigation. ( 2000,) An amalgamation of diverse ADR methods will take into account proper solution of conflicts where the parties concerned are all content with the ending. Alternative Dispute Resolution (ADR) connotes to any ways of resolving disputes external of the courtroom, characteristically counting arbitration, mediation, early neutral evaluation, and conciliation. 2004,) Progressively, nations have commenced to choose ADR as it is much less costly than litigation, there is the absence of time setbacks, no failure of privacy and it is an extremely efficient option where all the parties involved leave contented. Among the programs are voluntary even as others are obligatory. Parties can plan and put into practice practically any type of ADR, which is appropriate to their needs. The most frequent types of ADR are negotiation, mediation, arbitration among others. Out of which arbitration and mediation are the predominantly accepted. Mediation is a kind of casual gathering whereas arbitration is a decision proceduhal, 2005) Majority of ADR methods entail a neutral person or mediator who can help disputing parties in solving their differences. A lot of people become concerned that if they employ an alternative to a court procedure they are unable to compel the other side to meet with the solution as generally ADR are non-binding. Making the solution of the predicament into a legal contract or court order forestalls this setback.
ADR is getting hold of fame with people concerned in court cases and litigation for it’s cost effective, speedy, flexible and just features to all parties concerned. It provides all affiliates of the community the chance to resolve conflicts devoid of going to the courts. The parties concerned can choose the kind of ADR that they consider is best appropriate for them and pursue the procedure to solve their legal issues. Each type of ADR has its own laws and ways of resolving the conflict. In some instances, over one kind of ADR is employed in combination with each other. These are the different ADR methods available for the companies from the US and Saudi Arabia in dispute.
Negotiation
This is an open method of conversing and resolving a predicament. Parties or their delegates, who may possibly be lawyers, talk openly with each other. ( 20018) The negotiators try to find a means to please the requirements of the parties encountering the quandary.
Mediation
Mediation is an even less ceremonial substitute to litigation. This problem alternative employs a neutral individual similarly called as the mediator, to direct the dialogue and discuss means to resolve the predicament.l2,005, ) The mediator functions the role of catalyst that allows the parties to start advancement toward their own resolution of problems in conflict. The mediator does not possess any executive power, but provides conflicting parties in concert and assists with creating practical and efficient answers with the parties. Mediation is practical in extremely polarized disagreements where the parties have either been not capable to start a fruitful discussion or where the parties have been having discussions and have arrived at an ostensibly intractable stalemate.
Facilitation
This entails the employment of techniques to perk up the stream of data in a meeting involving parties to a dispute. The techniques may similarly be implemented to decision-making gatherings where a particular result is required. 2001, ) The word “facilitator” is frequently employed interchangeably with the word “mediator”, nevertheless a facilitator does not characteristically grow to be as caught up in the substantive concerns as does a mediator. The facilitator concentrates more on the procedure concerned in resolving an issue
Conciliation
The conciliation process is frequently employed together with other ways like facilitation or mediation. This entails building a positive connection involving the parties to a disagreement. (, 2001,) The parties, to assist in creating such affairs may employ a third party or conciliator. A conciliator may possibly help parties by serving to set up communication, explaining misperceptions, tackling strong sentiments, and constructing the trust essential for accommodating problem-solving. A number of the methods employed by conciliators take account of providing for an impartial seat, transporting early communications between the parties, reality testing on the subject of insights or misperceptions, and asserting the parties’ capabilities to join forces. Given that a general purpose of conciliation is frequently to encourage openness by the parties, this process permits parties to start discussions, become acquainted with each other much better, make constructive perceptions, and improve confidence with one another.
VIII. International Arbitration Courts
International arbitration is characterized as a methodical method of dispute resolution confidentially permitted by contractual parties. The system makes a procedure, whereby a selected private judge serving as a neutral possessing knowledge in the disputed field, carries out a hearing devoid of the usual official civil court proceedings. Arbitration is a procedure and arrangement of dispute resolution dating back, and has grown globally as a regular exercise starting off over the centuries. ( 2000,) Though the proceedings are completely private, arbitral verdicts are given on the predicate of international law and imposed by means of treaty. Considering those stated above, nonetheless, international commercial arbitration is perceived as an alternative dispute resolution device to that of litigation and the doubts relative to domestic court decisions. Consequently, the fundamental principle and significance of international commercial arbitration is to endorse, complement, and assist the development of global trade and commerce.
Fundamentally, commercial international arbitration sees ascendancy and enforcement by the use of applicable multilateral or bilateral convention, treaty, or agreement. Most noteworthy are the United Nations Convention on Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention) and the United Nations Commission on International Trade law Model Rules of Arbitration (UNCITRAL). (2000,) The efficient and conventional enforcement of arbitral measures are very much improved and made possible by such agreements and convention law. Along with the above and for the reason of international commercial arbitration brings to more conventional results than international domestic municipal law verdicts. It similarly is less costly than litigation. Moreover, it gives quicker resolution to disagreements. And finally, most international bodies favour private negotiation to determining disputes instead of litigation. Consequently, arbitration is the favoured instrument for determining international commercial conflicts. Well-off individuals employ their assets to International Commercial Arbitration similar to every other dispute resolution instrument has its good points and flaws. It has the advantage of being consensual. This means that the resolution of disagreement by non-governmental decision-makers and it brings about an obligatory award applicable by means National Courts. It is procedurally less official and inflexible than litigation in National Courts. It also has the qualities of discretion to defend business interest. If judicial interference is condensed to the minimum needed for guaranteeing efficient justice, it is similarly less costly. The future of international arbitration may well rely, at any rate partially, on the capability of arbitrators, parties to arbitration contracts, and courts to preserve the reliability of the international arbitral procedure. The following courts are available for companies from both Saudi Arabia and United States to go to when they encounter any form of dispute with one another.
A. International Chamber of Commerce (ICC)
The said court is a Paris-based arbitration body that handles disputes on both domestic and international scale. (1994,) notes the said body as “forum” for the resolution of disputes of an “international character.” The said author further added that an international dispute is considered international if it does affect certain “international commercial interests.” Being among the foremost standard bearers of arbitration all over the world, the ICC is also characterized as an organization which exercises quality control functions. (2003, )
Under the ICC Rules of Arbitration, the parties are to be the ones who will decide on the location of the arbitration. Assuming that the parties involved indeed agreed to the approval of a specific place as the seat of arbitration, the ICC rules require them to consult with the Arbitral Tribunal. This is to ensure that the place where the parties claim the seat of arbitration is appropriate and will provide an impartial location for the parties involved. This will similarly take away any possibility of remonstration from any of the parties in dispute. On the other hand, the issue on the arbitrator will be considered. First, Article 7 of the ICC Rules states that the arbitrator must remain independent of the parties involved in the dispute. This means that he must have no connection to the parties involved that would trigger any conflict of interest within the case. It is the duty of the said individual to disclose any information that would prove to be critical to the case. the standard procedure is that the claimant will be the one who will be the one who will provide a Request for Arbitration (Article 8). And within thirty days from the submission of the said request, the parties involved should be handing over their proposed arbitrator for the case. Otherwise, the ICC court will provide the arbitrator for the case. Otherwise, any of the parties in the dispute could challenge the appointment of such arbitrator. (Article 11) They could do this by submitting to the Secretariat a written statement that indicated all the information and situations that have triggered them to submit their challenge. However, they must carry this out within thirty days of the appointment of the said arbitrator. And it is up to the ICC court to decide whether the challenge will be heard and the arbitrator will be replaced. (Article12) Moreover, the ICC court has the power to proceed with the arbitration process despite any of the refusal of the said party. (Article 6.3) Moreover, the outcomes of such arbitration processes will continue to be binding.
B. London Court of International Arbitration (LCIA)
The London court of International Arbitration is similarly deemed as among the standard bearers of international arbitration. ( 2003, ) Similar to other arbitration bodies such as the ICC and the AAA, it is considered as place where “administered or institutional arbitration” is conducted. ( 2001,) To this end, the arbitrator is solely given the power to carry out is arbitration commissions devoid of any other “clerical and administrative” concerns relating to the case. ( 2001, )
According the to the LCIA Rules, if ever the parties involved has failed to supply the necessary place of arbitration and other hearings, then the seat of arbitration will automatically be in London. (Article 16, LCIA) Nevertheless, the LCIA still provides the parties of the dispute the necessary time to make a comment on the said seat. If they deem that another seat of arbitration would be pertinent or would even help in the case, then it is considered by the court. It is thus in the hands of the Arbitral Tribunal to decide where in London (assuming there is no prescribed place in the arbitration clause) the hearings, meetings, and deliberations will be made. (Article 16.2, LCIA) Moreover, given that the seat of arbitration, the LCIA rules similarly entails that the rules governing the proceedings of the arbitration would be under the pertinent laws of the said location.
With regards to the arbitrator, the rules under this court should not any nationality with the participating parties in the dispute. (Article 6.1, LCIA) This also means that the arbitrator should not share the same nationality as that of the controlling shareholders any of the party in dispute. . If the parties involved are not satisfied with the assigned arbitrator, then they could nominate their own as long as they have agreed on a same arbitrator. (Article 7.2, LCIA) Moreover, the recommended arbitrator of the parties involved should also submit its resume to the LCIA court as stated in Article 5.2 of the LCIA rules.
IX. Conclusion
An arbitration agreement is a statement by both parties that they will defer to arbitration in existing or prospective conflicts, and this is necessary to begin proceedings. This is frequently incorporated in a general contract in a particular clause. A stay of legal proceedings is approved to permit resolution of the conflict by means of arbitration devoid of the involvement of the courts. This more private method is frequently favoured by commercial parties and emphasizes one innate benefit of arbitration. Nevertheless, as with all alternative dispute resolution processes, there are drawbacks which show the flaws of successful systems. The existence of an arbitration clause is one such disadvantage. Such a clause in a long-standing contract needs a lasting pledge for a lot of parties and this can be intimidating and off-putting particularly if alterations in the future are likely. An institutional policy backing up arbitration similarly needs alterations in the view of executives and counsel and this alteration is not constantly well-received. Whereas this type of long term relationship can build a connection of trust involving parties and reinforce their business bonds, particularly if they are aware that court action will not be the consequence of every conflict.
In the said study, the discussion of both the Kingdom of Saudi Arabia as well as that of the United States’ arbitration laws has provided significant information with regards to the study of international arbitration. The study found out that the for international organizations, it would be beneficial for them to take on arbitration procedures in the United States considering the fact that the Kingdom of Saudi Arabia has instituted a law claiming to use of the Arabic language in the cases in the said country. This would prove to be inconvenient for the majority of multinational companies considering that the preponderance of them may well presumably be employing English as their language. Moreover, employing arbitration with the United States as the seat provides a greater presentation and much open provision of facts among the parties involved. The said issue is discussed above, particularly with regards to the subject of oil on the part of Saudi Arabia. Nevertheless, this study still supports it initial claim of employing third party arbitration in the international context in order to ensure that the process is unbiased and objective. In so doing, the parties would essentially be satisfied with the outcomes of the arbitration process.
X. References
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