Summary International business transaction (14/20)
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Module
International business transaction
Institution
Universiteit Gent (UGent)
Those are complete notes for the International business transaction course that I did, based on the oral explanations and the power points. It is perfectly complete and contains all relevant information
note: there might be some spelling faults
, International commercial arbitration
International business transaction| Anna Sonnenschein
Exam
→ Written
→ Applied questions (ex: you are a lawyer that has to give advice)
In international commercial transaction we see that businesspeople like arbitration and consider this option
when a dispute arises
→ Cross border litigation is not the prefers choice in the context of international business dispute
1. Definition: what is arbitration
It is a form of alternative dispute resolution.
→ Opinions are divided whether arbitration fits in it of not BUT for the sake of this class we will say that yes
◊ Anatomical features
you need to have
→ Agreement between the party! (see IV)
o There is a party autonomy
o The party must agree together to go through an arbitration
→ A dispute about rights and obligations
o It needs to affect the rights and obligation of parties
→ An arbitrator (See V)
o There are third parties that are ask to decided on the dispute as a third neutral party
o They do the same things as judges (render a decision about rights and obligaitons) and they have
the same state of mind as judges (= being neutral)
o The parties may decides on the arbitrary which help to shape the arbitration according to what
they need and what the procedure needs (+gives a sense of participation)
→ A final and binding decision (See VII and VIII)
o Rendered by the arbitrator
o = arbitral reward
o Possibility of recourse against this decision (BUT not often)
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, International business transaction| Anna Sonnenschein
◊ Types?
We make a distinction between Ad hoc and institutional arbitration
Ad hoc : a type of arbitration where parties do not rely on a set of executing rule
→ They cut out an extra third party and try to organizer everything directly.
Instituional arbitration : you agree with the other party that you will have an institution administer and organize
the procedure
→ They make sure that everything, procedure wise (procedure of setting the arbitration), goes smoothly.
→ It has a sort of framework that can rely on
o It has a set of rules that it can rely on and arbitrator can use
Main difference: in ad hoc there is not an extra third body that is involved in the procedure (the institution)
Why choose one over the other?
→ There can be plenty of reason.
→ Institution provides a number of guarantees.
o And when parties do not get along, it can be easier to have a third party between them (ad hoc
requires a bit more involvement from the parties)
o with the system comes a quality label
o you can also rely on the service of that institution and rely on her to get input because the staff
has experience in that
o = it gets you an extra security that the procedure will get along
→ Ad hoc offers the parties much more independence and autonomy in the organization of the procedure.
o They are not bound by rules.
→ There are pro and cons for each, so it has to be checked on a case-by-case basis
Examples of institutions
→ ICC : international lcourt of arbitration
→ AAA : American arbitration association
→ SUPANI
→ Every country has its own arbitration institutions so there are plenty.
→ AND there are also sector arbitration institutions
o There are set up to deal only with dispute that arises in a specific sector
o BUT we will focus on non-sector arbitration institutions.
2. (Dis)advantages
Why arbitrage?
◊ advantages
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, International business transaction| Anna Sonnenschein
Enforceability of awards = main reason why businesspeople chose to go for arbitration in an international
context
→ This has do to with the NY convention
o Very very important !
o It deals with the enforcement of reward BUT also fidelity of arbitration.
o And it regulates under what conditions an arbitration ward can be enforce or recognized.
▪ Those reason constitute the framework of a valid arbitration.
To avoid specific legal system/ international court : this goes with the idea of neutrality
→ Parties choose a panel that is composed of neutral arbitrator and especially the president will be a
neutral third party in the sense that it will not be of the nationality of the parties AND without any
connection with any of the parties
Flexibility: in the sense that they are not a lot of procedural rule that are imposed on the procedure
The ability of parties to select arbitrator.
→ Parties have a say on how the panel will be composed.
Confidentiality and privacy
→ As opposed to a court procedure, an arbitration is confidential (obligation for both the parties and the
arbitrator tribunal)
Speed : arbitration goes usually very fast compared to court proceeding
→ For a number of reasons
o Ex: there a no appeal, you cannot accept the job of arbitrator if you don’t have the ability ot deal
with the case
◊ disadvantages
Cost:
→ arbitrators are not paid by the government; they are paid by the parties
o they are paid by the value of the dispute and you may have to pay 3 arbitrator so it can become
quite expensive very fast
→ you also have to pay for all the cost and expense from the arbitration such as the rooms.
→ This is a big reason why parties will not go to arbitration
+ if there is a slight problem, you have to go to court and start all over again.
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