LAW & MORE: YOUR ARBITRATION LAWYER
LAW & MORE: YOUR ARBITRATION LAWYER
• Are you in need of advice about the possibilities for arbitration?
• Do you want to start an arbitration procedure?
• Are you planning to conclude an arbitration agreement?
Law & More is ready to help you! Our specialists have experience with arbitration and will assist you during the entire arbitration process.
WHAT IS ARBITRATION?
When parties have a conflict, there are several possibilities to resolve this. One of these options is arbitration. Arbitration is an alternative to a procedure before a court and is therefore a form of alternative dispute resolution. The difference with legal proceedings is that in arbitration the conflict is resolved without involving a judge. In an arbitration procedure, not a judge, but one or more experts decide on the dispute. Very often, these are experts who have knowledge of the industry in which the conflict takes place. The experts are independent third parties who decide on the dispute outside the normal jurisdiction and are called the arbitrators. Together, the arbitrators form the arbitration committee. This committee may consist of one or more arbitrators, as long as the number of arbitrators is odd. This is necessary to prevent an equality of votes, in order for a final decision to be taken.
If parties want to make use of arbitration, they must mutually agree to this. This can be done by concluding an arbitration agreement. Such an agreement can be concluded at two moments: when a dispute has actually arisen or when parties enter into a collaboration or contract, that is before any dispute arises. If the arbitration agreement is concluded at the moment that the parties enter into a collaboration, this agreement applies to all disputes that might arise in the future. In practise, an arbitration clause is often concluded in an agreement between parties. This is a provision that indicates that the parties agree on arbitration and that determines how the arbitration is arranged. It is important to formulate such a provision in a clear way. The following subjects must in any case be included in the arbitration clause:
• Institution where the arbitration shall take place
• Language of the arbitration
• Place of the arbitration
• Number of arbitrators
• Method of appointing arbitrators
• Allocation of costs of the arbitration between the parties
• Applicable law
However, arbitration does not always derive from an agreement between parties. An arbitration clause may also be included in binding articles of association or in regulations. In that case, the an arbitration clause is regarded as an arbitration agreement. For example, arbitration often takes place within sport, in which an arbitration clause is usually included in the articles of association of a sports club or sports federation. Furthermore, arbitration can be imposed through a reference to general terms and conditions. These general terms and conditions must then include that disputes are settled by means of arbitration.
An arbitration agreement or arbitration clause can refer to an arbitration regulation of a particular tribunal. As a result, this arbitration regulation will legally be part of the agreement between parties and parties must therefore comply with this regulation.
When an arbitral award is issued, this award is binding for all parties. A party that does not agree with the award, cannot submit this award to the public court after the arbitration procedure has ended. An appeal against an arbitral award is only possible when the parties have agreed on this possibility or when this option is included in an arbitration regulation or in general terms and conditions. However, appeal against an arbitral award is the exception rather than the rule. Nevertheless, it is possible that parties have a binding arbitral award annulled or revoked by a public judge. This applies both to an arbitral award in first instance and to an arbitral award in appeal. Annulment of an arbitral award by a public judge is only possible in the following cases:
• There is no valid arbitration agreement
• The arbitration committee is composed in violation with the rules
• The arbitration committee did not keep to their assignment
• The award is not properly signed or is not properly motivated
• The awards is in conflict with the public order
The judge should be cautious in conducting the investigations above. This is in order to prevent that procedures for annulment of an arbitral award will be used as an additional opportunity to start a procedure. When an arbitral award is annulled because there is no valid arbitration agreement, the jurisdiction of the public judge will revive. The judge can also revoke an arbitral award in the following cases:
• The award is based on deception that was discovered after issuing the award, which deception was committed by or with the knowledge of the other party in the arbitral proceedings
• The award is based on documents that appear to be false after issuing the award
• After issuing the award, a party obtains relevant documents that are withheld by the other party
ADVANTAGES AND DISADVANTAGES OF ARBITRATION
Alternative dispute resolution by means of arbitration can have both advantages and disadvantages. An advantage of arbitration is that parties generally are able to record many things in advance in the arbitration agreement. For example, agreements can be made with regard to the number of arbitrators who will assess the case and concerning the language of the arbitration. It is even possible that the agree that they appoint the arbitrators themselves. However, this comes with the condition that the arbitrators must be impartial and independent. In addition, arbitrators, unlike public judges, are often specialists in the area to which the case relates. This ensures a diligent and fast handling of the case. Moreover, arbitration proceedings are generally faster than court procedures; an arbitral award is often issued faster than a judgement by a public judge. In many cases, the arbitral award in first instance is also the final, binding judgement. Another major advantage of arbitration is that the arbitral award can easily be enforced in most countries in the world. This is more difficult with a judgement from a public judge. This makes arbitration interesting for international disputes. An arbitration procedure is also more confidential than a procedure before a public court. Arbitration procedures are not public; therefore, the entire existence of the arbitration procedure will in principle remain unknown to the outside world.
The main disadvantage of arbitration concerns the costs of the procedure. In principle, more costs are involved in an arbitration procedure than in a public procedure. Unlike in a public procedure, parties have to pay the fee of the arbitrators themselves. The more arbitrators there are, the higher the costs of the fees are. These costs can also increase substantially when the procedure concerns complicated matters. In addition, parties must also pay for the administration costs, witness and expert costs, costs of the courtroom and costs for depositing the arbitral award. However, at various arbitration institutes an expedited procedure can be followed, which aims to limit the costs of the procedure. It depends of the financial interest of the dispute and on what parties have agreed upon in the arbitration agreement, whether the expedited procedure can be followed.
WELL-KNOWN ARBITRATION INSTITUTES
There are several kinds of arbitration institutions, namely general institutes and institutes that have been founded with a particular specialization or for a certain market segment. Examples of specialized arbitration institutes are the Court of Arbitration for Sport (CAS) and the Dutch Council of Arbitration for Construction (RvA). Parties that mutually agree to have disputes settled by means of arbitration, usually opt for general arbitration institutes. The most well-known arbitration institutes in the Netherlands are the Dutch Arbitration Institute (NAI) and the International Court of Arbitration of the International Chamber of Commerce (ICC). These institutes have established their own rules with regard to the arbitration procedure. Parties must comply with these rules. In addition, the NAI and the ICC have also developed a standard arbitration clause, which parties can include in their agreement free of charge. For example, the ICC arbitration clause is worded as follows:
All disputes arising out of or in connection with the present contract shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with the said Rules.
Parties can adapt this clause to their particular circumstances by including the language and place of the arbitration, as well as the number of arbitrators, the way of appointing arbitrators, the division of the costs between parties and the applicable law. It is wise to include as many of these matters as possible, to avoid any later discussion.
The NAI is a Dutch foundation that independently settles disputes through arbitration, binding advice and mediation. The NAI is the largest general arbitration institute in the Netherlands. The actual arbitration is not conducted by the NAI, but by arbitrators affiliated with the NAI. Since the NAI is a general arbitration institute, it is annually involved in a wide variety of issues. The arbitrators within the NAI therefore have their origin in almost all sectors of social and business life. The NAI has established an Arbitration Regulation. This Regulation describes the arbitration procedure. Parties that have agreed upon arbitration at the NAI as the way of dispute resolution, also agree that the Arbitration Regulation applies. Therefore, the Arbitration Regulation becomes part of the agreement between parties. The average NAI arbitration procedure takes approximately nine months, from the request to the final award. The NAI also offers the possibility to start an arbitral preliminary injunction. This procedure is comparable to a preliminary injunction at a public court. An arbitral preliminary injunction at the NAI leads to a temporary provision and does not entail a final decision. The arbitrators of the NAI will pass a judgement in the arbitral preliminary injunction on very short notice.
The ICC is the most well-known arbitration institute worldwide. In most cases, parties that conclude international contracts in which they agree on arbitration opt for arbitration at the ICC. The ICC is an administrative body and therefore does not conduct the actual arbitration itself. However, the ICC does conduct the framework for the arbitration procedure, ensures that the arbitral committee is composed and ensures that all relevant rules are complied with. Furthermore, the ICC supports parties and arbitrators in overcoming administrative hurdles. The ICC has established rules with regard to the arbitration procedure, in the form of the ICC Rules of Arbitration. Parties that have agreed on arbitration at the ICC, agree with the application of these Rules. Because of this, the ICC Rules of Arbitration become of part of the agreement concluded between parties and parties therefore have to comply with these Rules. The duration of an arbitration procedure at the ICC depends on the case, but such a procedure can take up to two years. However, the ICC also offers parties an expedited procedure, which is conveniently called the Expedited Procedure. In some cases, this procedure automatically applies, unless parties have explicitly stated in the arbitration agreement that they opt-out for this procedure. Since only one arbitrator is appointed in the Expedited Procedure, this procedure costs a lot less than the normal arbitration procedure at the ICC.
LAW & MORE
An arbitration procedure is a specific procedure in which particular rules have to be followed. The specialists of Law & More have experience with arbitration and can assist you in a procedure. If you have any doubts about whether agreeing to arbitration is a good choice in your case, we can advise you on this. We will take all relevant aspects of your case into account and weigh the advantages and disadvantages of arbitration. If you want to draft an arbitration agreement, want to have an arbitration agreement reviewed or if you have any questions concerning an arbitration clause or regulation, we are also ready to assist you.