Doctrine of Competence-competence of International Commercial Arbitration

INTRODUCTION

Various changes and improvements were introduced over the past years in the resolution of international commercial disputes. The most notable of these changes is the introduction of laws that would help prevent standard court-based litigations and explore other methods in settling cases.

The United Nations Commission on International Trade Law (’UNCITRAL’) played a vital role in the use of alternative dispute resolution. UNCITRAL was established in 1966. It was able to achieve two landmark rules, the implementation of the UNCITRAL Arbitration Rules (1976) (’Arbitration Rules’) and the UNCITRAL Conciliation Rules (1980) (’Conciliation Rules’).

The contribution of various international experts from different legal, economic and social backgrounds enabled the UNCITRAL to come up with more competent resolution of international commercial disputes. Both Rules features the need to settle disputes between parties privately instead of public and legal method. This is an important aspect which differentiates the Rules from another important dispute resolution passed by UNCITRAL: the UNCITRAL Model Law on International Commercial Arbitration (’Model Law’).

ARBITRATION or CONCILIATION

Alternative dispute resolution comes in the form of : arbitration, assisted negotiation, counseling, conciliation, evaluation, expert appraisal, mediation and mini-trials. These methods are used to decide issues with national as well as international commercial relevance.

Despite its broad concepts and multitude of models for national and international commercial dispute resolution, the key alternatives can be summed up into two key areas: arbitration and conciliation. Arbitration occurs when the third person involved in the resolution of commercial dispute can impose a binding decision on parties while in conciliation the third party can only make recommendations that are not binding.

THE NEED FOR INTERNATIONAL ARBITRATION

Due to the recent trends of globalization and cross border investments, the business relationship has become more complex than ever. When disputes arise from businesses, resolving these requires the need for international commercial arbitration.

Over the last decades, the arbitration as resolution to disputes have been given due recognition by the international business communities. They realized the value of settling disputes before it reaches the court. It is not only less time-consuming, it is also more efficient and requires less costs.

The following are the features of international arbitration:

• Enforceability - awards from arbitrations are easily enforceable than court judgments.
• Neutral form – there is no need to be under another party’s national court. International arbitration allows neutral forum for settling of disputes.
• Procedural flexibility – rules in arbitration are often less complex compared to standard court proceedings making it suitable to parties coming from different jurisdictions.
• Arbitrators with experience – arbitrators are selected based on their familiarity with the applicable business practices and national laws.
• Party autonomy – parties are allowed to choose governing laws, place of arbitration and other aspects pertaining to arbitration assuring them fair treatment of their case.
• Cost – there is no way to tell if arbitration costs lower than standard court trial but it does not require court fees at all and parties can agree on a process that is suitable for the dispute.
• Pre-emptive remedies – arbitral tribunal can provide preliminary relief such freezing of assets although imposing criminal sanctions is not allowed in arbitration.
• Joinder of parties and related disputes – it is necessary to acquire all parties’ consent before being joined to an existing similar arbitration.

United Nations Commission on International Trade Law (UNCITRAL),
Model Law on International Commercial Arbitration (’Model Law’)

The UNCITRAL Arbitration Rules (1976) (’Arbitration Rules’) and the UNCITRAL Conciliation Rules (1980) (’Conciliation Rules’) are considered contractual trade law dispute resolution. Since the possibilities open to the private parties in an arbitration or conciliation under the Rules is in danger of being thwarted by the domestic laws operating in the different countries involved in the dispute. The Model Law provides countries with a guide that they can apply in their national laws to be able to “provide a hospitable legal climate for international commercial arbitration”.