Introduction
Arbitration as defined by the American Bar Association is “ a private process where disputing parties agree that one or several individuals can make a decision about the dispute after receiving evidence and hearing arguments”[1]. With the increase in international trade, the geographical borders between the countries that previously deterred prevented fluent trade between various parties are becoming more translucent with every day.
States with a viewpoint to accelerate globalization and bring foreign investment in the form of Foreign Direct Investment (FDI) collectively form two-party treaties also knows as bilateral investment treaties to safeguard the rights of the investors and also to attract prospective investors [2]. Despite all the treaties in place, disputes do arise and happen in common parlance, the corporations seek quick resolutions and seek to resume operations at the earliest but the traditional courts are unable to offer the same. Arbitration, a modern, cost-effective, faster, and less complex form of dispute resolution, helps resolve such disputes which are not presided by the judges of the state but private judges appointed by the parties themselves.
These proceedings require some uniform rules and regulations and hence an international model law was created by the United Nations Commission on International Trade Law, a subsidiary body of the United Nations General Assembly, called UNCITRAL Model Law on International Commercial Arbitration,1985.
UNCITRAL As A Body –What?, How?, When?, Why?.
With the exponential increase in global trade post-world-war II, it was imperative to set up a globally accepted legal framework to assist international trade. The United Nations Commission on International Trade Law(UNCITRAL) was established by the United Nations General Assembly with resolution 2205(XXI) of 17 December 1966[3]. The objective at the time of creation was the “promotion of the progressive harmonization and unification of the law of international trade”[4].
In 1969 The United Nations General Assembly authorized the Secretary-General to publish an annual yearbook that would make the contributions of the commission known and available, the first yearbook was published in the year 1971. The first part of the yearbook elaborates why was the commission created, the representatives from Hungary made the assembly realize that under the charter of the United Nations, the General Assembly was responsible for promoting “ the progressive development of international law and its codification”[5] and also figuring out “steps to be taken for progressive development in the field of private international law with the particular view of promoting international trade”[6]. The security General submitted the report which had been provided by Dr.Clive M. Schimtthoff with comments from 5 experts in the field of international trade, a debate was then carried out in the sixth committee and the assembly resolved to create the commission which shall be known as the UNCITRAL, the committee comprised of 29 members.
The commission during its first four-week session which was held in New York in January and February of 1968[7] enlightens us to what was committee doing, UNCITRAL was a committee that prioritized three things, i) international sale of goods, ii) international payments iii) International commercial arbitration. The fourth was added to the list in its next four-week session in the year 1969, which was international shipping legislation[8].
Mandate and Its Fulfillment
The General Assembly gave directions to the commission in the form of its mandate to “further the progressive harmonization and unification of the law of international trade”[9]. The commission now has become a core legal body in the field of international trade law.
The Uncitral strives to complete the mandate in the following ways:-
- “Coordinating the work of organizations active in this field and encouraging cooperation among them”;
- “Promoting wider participation in existing international conventions and wider acceptance of existing model and uniform laws”;
- “Preparing or promoting the adoption of new international conventions, model laws, and uniform laws and promoting the codification and wider acceptance of international trade terms, provisions, customs, and practices, in collaboration, where appropriate, with the organizations operating in this field”;
- “Promoting ways and means of ensuring a uniform interpretation and application of international conventions and uniform laws in the field of the law of international trade”;
- “Collecting and disseminating information on national legislation and modern legal developments, including case law, in the field of the law of international trade”;
- “Establishing and maintaining a close collaboration with the United Nations Conference on Trade and Development”;
- “Maintaining liaison with other United Nations organs and specialized agencies concerned with international trade”; and
- “Taking any other action it may deem useful to fulfill its functions.”[10]
UNCITRAL Model Law On International Commercial Arbitration,1985.
After working for the past 20 years in accordance with the United Nations Convention on the Recognition and enforcement of Foreign Arbitral Awards(New York Convention), a review was conducted and it was concluded that a “protocol to the convention was not necessary, but that further work on a model law could assist states in reforming and modernizing their law on arbitration….reduce divergencies encountered in the interpretation of the 1958 convention and minimize the possible conflicts between national laws and arbitration rules”[11]. A working group was set up in the year 1982 and during the course of its 5 sessions, in February 1984, a draft was prepared and was made available to various governments to get their comments.
After three weeks of diplomatic conferences which were attended by representatives of various member states and international organizations, the United Nations Commission On International Trade Law was adopted on June 21, 1985[12]. It was intended to serve as a model for arbitration legislation, making the rules and procedures of arbitration more acceptable and uniform for the ease of every member and also replacing old and non-uniform laws that had been in places such as the Rome Institute for the Unification of Private Law and the Hague Conference on Private International Law[13].
The full model law can be viewed here.
Guiding Principles and The chapters
Party Autonomy- One of the primary features of arbitration proceedings is that parties enjoy full autonomy and the UNCITRAL model of law is no different. It was stated that “probably the most important principle on which the model law should be based is the freedom of the parties … to tailor the ‘rules of the game’ to their specific need”[14].
Consistent With the rules Of the New York Convention and UNCITRAL- As the model law was based on UNCITRAL and the New York Convention it was imperative that it be similar to the rules because of the consistency. The rules are now known for neutrality and uniformity[15].
Limited Court Intervention – Arbitration proceedings work best with minimal court intervention which was reflected in the model law. The role of courts was limited to assistance and support of the arbitral process and not to interfere in the proceedings. Article 5 exclusively limits the intervention of the courts, article 27 mentions assisting the arbitral tribunal, if so requested, in the taking of evidence within the model law state[16]. Article 35 and 36 concern themselves with enforcing and refusal of rewards respectively.
Arbitrator Authority – The arbitrator under the model law are given various powers which are subject only to the contrary agreement of the parties. “The arbitral tribunal is empowered to decide on challenges to a given arbitrator (Art. 13(2));14 rule on its jurisdiction (Art. 16); order interim measures of protection or provide security (Art. 18); determine the procedure for the conduct of the arbitration and admissibility of evidence (Art. 19(2)); determine the place of arbitration (Art. 20); determine the language of the proceedings (Art. 22); decide whether to hold oral hearings where such hearings are not requested (Art. 24(1)); terminate or continue proceedings on default of a party duly notified (Art. 25); appoint experts to assist the tribunal (Art. 26); request court assistance in the taking of evidence (Art. 27); decide the controversy in accordance with the applicable rules of law (Art. 28); correct facial errors in the award on its own initiative within 30 days (Art. 33(2)); and extend the period of time for such corrections or interpretations of the award”[17].
Rules and Procedure
Due to the autonomous nature of the proceedings, most of the rules are drafted by the parties themselves, still, the rules regulate the arbitral proceedings and should be looked at in detail. “The Rules provide for the preparation of the case in writing: this in- includes the statement of claim (art. 18) and the statement of defense (art. 19). The latter may contain a counterclaim arising out of the same contract. Amendments to a claim or defense are generally allowed (art. 20). The arbitral tribunal decides whether further written statements, in addition to the statement of claim and the statement of defense, shall be required and will again fix the periods for communicating such statements (art.20)”[18]. The parties must give special attention to the formulating of rules as a party who due to ignorance or mistake does not protest against a rule which the party feels has not been complied with shall subsequently be deemed to waive the right to object mentioned in the article 30.
Conclusion
The UNCITRAL Model Law on International Commercial Arbitration was set up with several objectives, and to bring about uniformity in the international trade laws to help felicitate the term globalization. The model law was set up to convenience the parties in resolving their disputes in a new and expedited manner which was recognized throughout the world. With the new era of trade disputes getting resolved via the means of arbitration, its proceedings are being preferred over traditional courts. With the future of arbitration secure and bright, the model law shall serve as the holy temple of laws which shall have its essence as well as its presence in all the international arbitration proceedings that will happen anywhere in the world.
[1] Ameican Bar Association, Arbitration American bar Association, https://www.americanbar.org/groups/dispute_resolution/resources/DisputeResolutionProcesses/arbitration/ (last visited Aug 18, 2021).
[2] ROHITH N. SUBRAMONIAM & NAVYA JAIN, INTERNATIONAL COMMERCIAL ARBITRATION : AN INTRODUCTION (ABHINANDAN MALIK, EASTERN BOOK COMPANY,2021).
[3] UNITED NATIONS, A GUIDE TO UNCITRAL, UNITED NATIONS COMMISSION ON INTERNATIONAL TRADE LAW(AUG, 2021), https://uncitral.un.org/sites/uncitral.un.org/files/media-documents/uncitral/en/12-57491-guide-to-uncitral-e.pdf.
[4] Id.
[5] E. ALLAN FARNSWORTH, UNCITRAL – WHAT?, WHEN?, HOW?, WHY?., VOL 20 No. 2 O.J., 314 , 314-322(1972).
[6] Id.
[7] UNITED NATIONS COMMISSION ON INTERNATIONAL TRADE LAW, YEARBOOK, VOL. I: 1968-1970, 65,(1971).
[8] Id.
[9] NEW YORK CONVENTION, UNCITRAL: UNITED NATIONS COMISSION OF INTERNATIONAL TRADE LAW, NEW YORK ARBITRATION CONVENTION, (AUG, 18), https://www.newyorkconvention.org/uncitral .
[10] UNITED NATIONS,GENERAL ASSEMBLY RESOLUTION 2205 (XXI), SECT. II, PARA. 8,(1966).
[11] MICHAEL F. HOELLERING, THE UNCITRAL MODEL LAW ON INTERNATIONAL COMMERCIAL ARBITRATION,VOL 20 No.1, 328, 327-329.(1986).
[12] Id.
[13] Id. 5
[14] [14] MICHAEL F. HOELLERING, THE UNCITRAL MODEL LAW ON INTERNATIONAL COMMERCIAL ARBITRATION,VOL 20 No.1, 329, 327-329.(1986).
[15] Id.
[16] SEE MELIS, ARBITRATION AND THE COURTS, IN INTERNATIONAL COUNCIL FOR COMMERCIAL ARBITRATION, UNCITRAL’S PROJECT FOR A MODEL LAW ON INTERNATIONAL COMMERCIAL ARBITRATION 83 (NETHERLANDS, 1984).
[17] Id. 15, 331.
[18] PITERS SANDERS, PROCEDURES AND PRACTICES UNDER THE UNCITRAL RULES, VOL 20 No.2/3, 459, 453-468 (1979).
YLCC would like to thank Abhinav Mishra for his valuable in this article.
