International Documents and Organs Regulating ADR
ADR is being recognized as the most effective means of settling international disputes of any type. Basically, diplomatic and commercial relations are being enhanced by the employment of amicable dispute resolution mechanisms. To help this disposition to ADR than to other courts, lots of treaties have been signed so far either under the supervision of the UN or under the initiation of other public and domestic institutions and states. Tribunals have been established as a result of these treaties to serve as the best forum in settling disputes of international and domestic nature.
In the coming discussions we will try to see few of these international documents and tribunals. The writer of this sections believes that there are much more institutions which are not discussed for it does not get priority. Students are encouraged to make a deeper look to the remaining institutions. Thus, the widely known international institutions like the American Arbitration Association (AAA), the London Court of International Arbitration (LCIA), the Singapore International Arbitration Centre (SIAC), and the Stockholm Chamber of Commerce are not discussed. There are also ADR tribunals that have specialized in settling dispute of specific nature. The London Maritime Arbitration Center is one of them.
I have selected four different sets of international documents for easy understanding of ADR in international level. The 1958 New York Convention on the Recognition and Enforcement of Arbitral Awards as adopted by the UN diplomatic conference on June 10, 1958 and entered in to force in 7th of June, 1959 is the first one. Secondly, the five documents under the Permanent Court of Arbitration (PCA) two of which are Conventions that established the PCA whereas the others are optional laws are summarized. The United Nation Commission on International Trade Law (UNCITRAL) and the documents under it are also introduced in the later part. Lastly, the institution of the International Chamber of Commerce, its tribunal (International Court of Arbitration – ICA) and its rules have been discussed.
New York Convention on the Recognition and Enforcement of Foreign Arbitral Award, 1958
The Convention on the Recognition and Enforcement of Foreign Arbitral Awards, also known as the New York Convention, was adopted by a United Nations diplomatic conference on 10 June 1958 and entered into force on 7 June 1959. The Convention requires courts of contracting states to give effect to private agreements to arbitrate and to recognize and enforce arbitration awards made in other contracting states. Widely considered the foundational instrument for international arbitration, it applies to arbitrations which are not considered as domestic awards in the state where recognition and enforcement is sought. Though other international conventions apply to the cross-border enforcement of arbitration awards, the New York Convention is by far the most important.
In 1953, the International Chamber of Commerce (ICC) produced the first draft Convention on the Recognition and Enforcement of International Arbitral Awards to the United Nations Economic and Social Council (ECOSOC). With slight modifications, the ECOSCOC submitted the convention to the International Conference in the Spring of 1958. The Conference was chaired by Willem Schurmann, the Dutch Permanent Representative to the United Nations and Oscar Schachter, a leading figure in international law who later taught at Columbia Law School and School of International and Public Affairs, and served as the President of the American Society of International Law.
International arbitration is an increasingly popular means of alternative dispute resolution for cross-border commercial transactions. The primary advantage of international arbitration over court litigation is enforceability: an international arbitration award is enforceable in most countries in the world. Other advantages of international arbitration include the ability to select a neutral forum to resolve disputes, that arbitration awards are final and not ordinarily subject to appeal, the ability to choose flexible procedures for the arbitration, and confidentiality.
Once a dispute between parties is settled, the winning party needs to collect the award or judgment. Unless the assets of the losing party are located in the country where the court judgment was rendered, the winning party needs to obtain a court judgment in the jurisdiction where the other party resides or where its assets are located. Unless there is a treaty on recognition of court judgments between the country where the judgment is rendered and the country where the winning party seeks to collect, the winning party will be unable to use the court judgment to collect.
B. Overview of the Convention
The convention has got XVI articles divided in to further sub articles, but with no further division in to parts. It defines ‘foreign arbitral award’ as arbitral awards made in the territory of a State other than the State where the recognition and enforcement of such awards are sought, and arising out of differences between persons, whether physical or legal. In addition, arbitral awards not considered as domestic awards in the State where their recognition and enforcement are sought can be assimilated to foreign arbitral awards as per Article I(1) of this the convention. Article IV obliges the party applying for recognition and enforcement to provide, in the language of the nation where enforcement or recognition is sought, the copy of the authenticated original award or a duly certified copy thereof and the original agreement (arbitral submission) or a duly certified copy thereof.
Under the Convention documents as per Article II and III, an arbitration award issued in any contracting state can generally be freely enforced in any other contracting state, only subject to certain, limited defenses. These defenses are:
- party to the arbitration agreement was, under the law applicable to him, under some incapacity;
- the arbitration agreement was not valid under its governing law;
- a party was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings, or was otherwise unable to present its case;
- the award deals with an issue not contemplated by or not falling within the terms of the submission to arbitration, or contains matters beyond the scope of the arbitration (subject to the proviso that an award which contains decisions on such matters may be enforced to the extent that it contains decisions on matters submitted to arbitration which can be separated from those matters not so submitted);
- the composition of the arbitral tribunal was not in accordance with the agreement of the parties or, failing such agreement, with the law of the place where the hearing took place (the "lex loci arbitri");
- the award has not yet become binding upon the parties, or has been set aside or suspended by a competent authority, either in the country where the arbitration took place, or pursuant to the law of the arbitration agreement;
- the subject matter of the award was not capable of resolution by arbitration; or
- enforcement would be contrary to "public policy".
C. List of Member States
Countries which have adopted the New York Convention have agreed to recognize and enforce international arbitration awards. As of September 2007, 141 of the 192 United Nations Member States and the Holy See have adopted the New York Convention. Only 51 Member States and Taiwan have not yet adopted the New York Convention. A number of British Dependent Territories have not yet had the Convention extended to them by Order-in-Council. For easy understanding of the status of world nations in light of the convention, here are the list nations that are signatories and which are not party to it. The fact that Ethiopia and many other African nations are not signatories to the convention can be easily analyzed on the face of these lists. In the last part of this chapter we will see Ethiopian approach to these documents and the alternative one as well.
STATE PARTIES TO THE CONVENTION ON THE RECOGNITION AND ENFORCEMENT OF FOREIGN ARBITRAL AWARDS, 1958 (as of May 2007)
Afghanistan, Albania, Algeria, Antigua and Barbuda, Argentina, Armenia, Australia, Austria, Azerbaijan, Bahamas, Bahrain, Bangladesh, Barbados, Belarus, Belgium, Benin, Bolivia, Bosnia and Herzegovina, Botswana, Brazil, Brunei Darussalam, Bulgaria, Burkina Faso, Cambodia, Cameroon, Canada, Central African Republic, Chile, China, Colombia, Costa Rica, Cote d’Ivore, Croatia, Cuba, Cyprus, Czech Republic, Denmark, Djibouti, Dominica, Dominican Republic, Ecuador, Egypt, El Salvador, Estonia, Finland, France, Gabon, Georgia, Germany, Ghana, Greece, Guatemala, Guinea, Haiti, Holy See, Honduras, Hungary, Iceland, India, Indonesia, Iran, Ireland, Israel, Italy, Jamaica, Japan, Jordan, Kazakhstan, Kenya, Kuwait, Kyrgyzstan, Lao People's Democratic Republic, Latvia, Lebanon, Lesotho, Liberia, Lithuania, Luxembourg, Madagascar, Malaysia, Mali, Malta, Marshall Islands, Mauritania, Mauritius, Mexico, Moldova, Monaco, Mongolia, Montenegro, Morocco, Mozambique, Nepal, Netherlands, New Zealand, Nicaragua, Niger, Nigeria, Norway, Oman, Pakistan, Panama, Paraguay, Peru, Philippines, Poland, Portugal, Qatar, Republic of Korea, Romania, Russian Federation, Saint Vincent and the Grenadines, San Marino, Saudi Arabia, Senegal, Serbia, Singapore, Slovakia, Slovenia, South Africa, Spain, Sri Lanka, Sweden, Switzerland, Syrian Arab Republic, Thailand, The former Yugoslav Republic of Macedonia, Trinidad and Tobago, Tunisia, Turkey, Uganda, Ukraine, United Arab Emirates, United Kingdom of Great Britain and Northern Ireland, United Republic of Tanzania, United States of America, Uruguay, Uzbekistan, Venezuela, Vietnam, Zambia, Zimbabwe.
States which are Not Party to the New York Convention (as of May 2007)
Andorra, Angola, Belize, Belize, Bhutan, British Virgin Islands, Burundi, Cape Verde, Chad, Comoros, Congo - Dem. Republic of the, Equatorial Guinea, Eritrea, Ethiopia, Fiji, Gambia, Grenada, Guinea-Bissau, Guyana, Iraq, Kiribati, North Korea, Libya, Liechtenstein, Malawi, Maldives, Micronesia, - Fed. States of, Myanmar, Namibia, Nauru, Palau, Papua New Guinea, Rwanda, Saint Kitts and Nevis, Saint Lucia, Samoa, Sao Tome and Principe, Seychelles, Sierra Leone, Solomon Islands, Somalia, Sudan, Suriname, Swaziland, Timor-Leste, Togo, Tonga, Tajikistan, Turkmenistan, Tuvalu, Vanuatu, Yemen
This document, in fact, harmonized the enforcement of foreign arbitral award since most of the nations of the world approved it. Its contents help the disputants to fill confidence on enforceability of outcomes of tribunals validly established out of their national jurisdiction. The fact that Ethiopia is not yet the signatory of this document by itself will not absolutely hinder the enforceability of awards given elsewhere for we can use the civil procedure provisions (Arts 450 – 456) in the matter.
Convention for the Pacific Settlement of International Disputes (1899 and 1907) and the Permanent Court of Arbitration (PCA)
The Convention which could be said the first in its nature and content came in to the hands of leaders in the late 1890’s for approval. The same document, with out affecting the status of the existing one and as well the commitment of signatories, by enclosing a more detailed stipulation came in to existence in 1907. These two conventions are the founding documents of the Permanent Court of Arbitration (PCA), which is established two decades before the establishment of the Permanent Court of Justice in the late 1910’s, which is now replaced by the International Court of Justice.
The objectives behind the initiation of these conventions are set in the preamble of the documents. The great Majesty and Empresses of the time, in 1899, have put the following as their objective
- a strong desire to work for the maintenance of general peace;
- to resolve and promote by their best efforts the friendly settlement of international disputes;
- recognizing the solidarity uniting the members of the society of civilized nations;
- desirous of extending the empire of law, and of strengthening the appreciation of international justice;
- convinced that the permanent institution of a tribunal of arbitration, accessible to all, in the midst of the independent Powers, will contribute effectively to this result;
- having regard to the advantages attending the general and regular organization of the procedure of arbitration;
- sharing the opinion of the august initiator of the International Peace Conference that it is expedient to record in an international agreement the principles of equity and right on which are based the security of States and the welfare of peoples.
Among the points that necessitated the coming in to existence of the new Convention which was signed in the year 1907 were the following (it is noted that the second Convention also shares the objectives set by the first one listed here above);
- Insuring the better working in practice of Commissions of Inquiry and Tribunals of Arbitration, and of facilitating recourse to arbitration in cases which allow of a summary procedure;
- The necessity to revise in certain particulars and to complete the work of the First Peace Conference for the pacific settlement of international disputes (held in 1899);
The first convention has 61 articles under four Titles. Title I, shortly in a single article, sets the objective of the Convention and interests of the signatory nations, i.e. “with a view to obviating, as far as possible, recourse to force in the relations between States, the Contracting Powers agree to use their best efforts to ensure the pacific settlement of international differences.” Title II established the first alternatives of settling dispute among member states by using “Good Offices and Mediation” and the procedures there under. The third Title deals with the possibility of establishing “International Commission of Inquiry” to facilitate a solution for differences of international nature by elucidating the facts by means of an impartial and conscientious investigation. The last Title, in depth, regulates international arbitration between the member states. This part established the Permanent Court of Arbitration in its chapter two having its seat in The Hague. The organization of the tribunal, the powers and duties of the disputant states before the tribunal, the jurisdiction of the court, the effect and binging nature of the award has been thoroughly discussed. At end, the Convention has got a General Provision which speaks about the ratification or membership process, the coming in to force of the Convention and other matters.
When we come to the second Convention, most of its contents are similar with the 1899 Convention except in some circumstances. It has, in deed, 97 Articles under its five Parts. I could say that the first two parts of this convention is a literal copy of its predecessor. Under Part III, which deals about the International Commission of Inquiry, more detailed provisions have been included as to its working procedure. Especially, the commission has been put under the supervision of the International Bureau of the Permanent Court of Arbitration, which serves as a registrar. Part IV of it included a new system which was not there under the predecessor Convention. Chapter IV of it established “Arbitration by Summary Procedure” in disputes admitting of a summary procedure. The last one, Part V, is devoted for “Final Provisions” regarding membership and coming in to force of the Convention.
When we come to memberships, we can see three different categories of nation; member for one of the Conventions and member for both of the Conventions. Generally speaking, 107 states have acceded to one or both of the PCA's founding conventions. It is noted here that Ethiopia is a member to the 1899 founding convention starting from May 28, 2003. Proclamation No 348/2003 approves the said Convention and incorporated it to the legal regime of the nation.
In addition to these founding Conventions, the PCA has some more Arbitration and Conciliation rules where the disputing parties can free to accept or refuse of its application on their disputes. These are, the 1992 PCA Optional Rule for Arbitrating Disputes between two States, the 1996 PCA Optional Rules for Arbitration Involving International Organization and States, and the 1996 PCA Optional Conciliation Rules. These optional rules made in accordance with the UNCITRAL model laws enacted so far including model Arbitration and Conciliation clauses.
The first two optional rules, i.e. arbitration rules, have been elaborated for use in arbitrating disputes arising under treaties or other agreements between two States, and disputes arising under treaties, or other agreements or relationships between an international organization and a State, or between two international organizations. But they can be, as well, modified for use in connection with multilateral treaties. The Rules are based on the UNCITRAL Arbitration Rules with changes in order to:
(i) reflect the public international law character of disputes between States, and between international organizations and States and diplomatic practice appropriate to such disputes ;
(ii) indicate the role of the Secretary-General and the International Bureau of the Permanent Court of Arbitration at The Hague, and the relation of these Rules with the 1899 and 1907 Hague Conventions for the Pacific Settlement of International Disputes; and
(iii) provide freedom for the parties to choose to have an arbitral tribunal of one, three or five persons.
The Rules are optional and emphasize flexibility and party autonomy. For example:
(i) the Rules, and the services of the Secretary-General and the International Bureau of the Permanent Court of Arbitration, are available for use by all States, and are not restricted to disputes in which both States are parties to either The Hague Convention for the Pacific Settlement of International Disputes of 1899 or that of 1907;
(ii) the choice of arbitrators is not limited to persons who are listed as Members of the Permanent Court of Arbitration;
(iii) States have complete freedom to agree upon any individual or institution as appointing authority. In order to provide a failsafe mechanism to prevent frustration of the arbitration, the Rules provide that the Secretary-General will designate an appointing authority if the parties do not agree upon the authority, or if the authority they choose does not act.
The following can be said about the PCA’s Optional Conciliation Rule.
A. Purpose of the Rules
Parties who have disputes that they are unable to settle through consultation and negotiation with each other may wish to consider conciliation as a method for resolving their differences without the need to resort to arbitration or judicial means.
Although the benefits of conciliation are widely recognized, some parties may hesitate to enter into conciliation because they may be unfamiliar with the process or may have different views concerning how conciliation should be conducted. In order to facilitate greater use of conciliation, the Permanent Court of Arbitration has, with the approval of the Administrative Council, established these Optional Conciliation Rules (‘the PCA Optional Conciliation Rules’). These Rules are based on the UNCITRAL Conciliation Rules, with changes to indicate, inter alia, the availability of the Secretary-General of the Permanent Court of Arbitration to assist in appointing conciliators and of the International Bureau to furnish administrative support (Arts 4 (3) and 8).
The purpose of these Rules is to provide a convenient basis for mutual agreement of parties on practical procedures that are useful in the conciliation process. Thus, for example, the Rules describe how to start a conciliation, how to appoint conciliators, what functions conciliators are expected to perform, and how to encourage parties to speak freely and candidly with conciliators while at the same time preserving necessary confidentiality. These Rules also describe how, if the conciliation is unsuccessful, it may be easily terminated so as not to delay or prejudice recourse to arbitration, judicial procedures or other means for ultimately resolving the dispute.
B. Scope of Application
The PCA Optional Conciliation Rules were prepared primarily for use in assisting to resolve disputes arising out of or relating to legal relationships where the parties seek an amicable settlement of their differences. In addition, parties are free to agree to use these Rules in seeking to resolve any other type of dispute.
These Rules are intended for use in conciliating disputes in which one or more of the parties is a State, a State entity or enterprise, or an international organization. Thus, for example, the same Rules may be used in disputes between two States and also in disputes between two parties only one of which is a State.
The PCA recognizes the importance and complexity of disputes that involve more than two parties. These Rules are also appropriate for use in connection with multiparty disputes, provided that changes are made to reflect participation by more than two parties. The Secretary-General of the Permanent Court of Arbitration is available to consult with interested parties concerning modifications that may be considered in adapting these Rules for use in multiparty disputes.
These Rules, and the services of the Secretary-General and the International Bureau, are available for use by all States and their entities and enterprises, and are not restricted to disputes in which the State is a party to either the Hague Convention on the Pacific
Settlement of International Disputes of 1899, or that of 1907, nor is the choice of conciliators limited to persons who are listed as Members of the Permanent Court of Arbitration.
In modern international practice, the word ‘mediation’ is sometimes used to designate a process that is very similar to the procedures for ‘conciliation’ described in these Rules. In such cases, these Rules can also be used for mediation, it being necessary only to change the words ‘conciliation’ to ‘mediation’ and ‘conciliator’ to ‘mediator.’
C. Main Characteristics of the Rule
Parties who consider using the PCA Optional Conciliation Rules will wish to be aware of some of the main characteristics of these Rules:
A Voluntary Process - A primary principle that is expressed throughout these Rules is that initiating and continuing conciliation is entirely voluntary. Thus, these Rules provide that conciliation begins when all parties consent (Arts 2 (2) and 3) and that one party may terminate the process whenever it unilaterally determines that conciliation is no longer desirable (Art 15 (a)). These provisions reflect the belief that conciliation has the best chance to succeed when all parties share the desire to participate, and that, if they do not, it may be more efficient to resort without delay to arbitration or judicial means.
Flexible Procedures - Flexibility is another fundamental characteristic of these Rules. Parties are free to agree to have one or more conciliators (art. 3). The conciliator may conduct the process in such manner as he considers appropriate, taking into account the circumstances of the dispute, any views the parties may have expressed and any special need for a speedy settlement. The role of the conciliator under the PCA Optional Conciliation Rules is to assist parties to understand the issues and to reach an amicable settlement of their dispute. In pursuit of this goal, the conciliator may recommend terms of settlement if and when it is considered wise to do so, but the conciliator is not required to give a recommendation (art. 7 (4)). The approach of the conciliator under these Rules is to bring the parties to agreement by a variety of means, rather than to focus primarily on influencing the parties by a recommendation.
An Integrated System - A significant feature of the PCA Optional Conciliation Rules is that they are part of an integrated PCA dispute resolution system that links the procedures for conciliation with possible arbitration under the various PCA Optional Arbitration Rules. This is useful because if a dispute is not resolved by conciliation, parties may wish to move promptly to final and binding arbitration. Therefore, these Rules provide several important safeguards that apply in the event that arbitration, or recourse to judicial means, follows an unsuccessful conciliation.
The ultimate safeguard against using conciliation to delay commencement of arbitration is the key provision of these Rules that, as mentioned above, permits one party to terminate conciliation if it reaches the conclusion that the conciliation is no longer desirable. Moreover, by agreeing to conciliation under these Rules, the parties undertake that if the conciliation does not result in a settlement they will not introduce in any subsequent arbitration, or judicial proceedings, certain specified evidence that might be harmful. The evidence thus barred by these Rules consists of: (i) any views expressed by either party concerning possible settlement of the dispute; (ii) any admissions made by either party in the conciliation; (iii) any proposals made by the conciliator(s); or (iv) the fact that a party indicated willingness to accept a proposal for settlement made by the conciliator (art. 20). These provisions effectively protect parties and thereby encourage candor and a free exchange of views during the conciliation. Additional safeguards in these Rules include that the parties and conciliator undertake that, unless the parties vary the Rules, a conciliator will not act as an arbitrator or representative of a party in any arbitration or judicial proceeding in respect of a dispute that is subject to the conciliation, and that no party will present a conciliator as a witness in any such proceeding (art. 19).
A related safeguard arises from the provision of these Rules that makes clear that the conciliator may speak with the parties together or may meet them separately when that is advisable (art. 9 (1)). These Rules also provide that a party may communicate information to the conciliator subject to the restriction that it not be disclosed to the other party (art. 10). These provisions encourage parties to confide in the conciliator – which may be vital in guiding the conciliator in the search for an amicable solution – and also to protect parties in arbitration or court litigation that may occur if no solution is found in the conciliation.
The Conventions for the Pacific Settlement of International Disputes are the first documents that opened the mob towards common understanding of the value of ADR in the settlement of international disputes of any kind. The fact that the PCA were working well even before the establishment of League of Nations and the court under it, i.e. the Permanent Court of Justice, shows us the common understanding of the leaders of the nation about the threat of dispute to the world peace and the value of ADR to tackle it. The new three rules are not mandatory rules and anybody whether a member to the PCA or not can freely use it though the matter has not been referred to the PCA.