Arbitration - Part 2

Arbitration - ( Continued from Part -1)

 

This means that incorporating changes to the UNCITRAL Arbitration Rules, the Model Law or to the New York Convention becomes much easier and faster.

In the contentious area of challenging arbitral awards, the Scottish Act has gone a notch higher to restrain the courts from interfering with the arbitration. Although the grounds for the challenge of an award are similar with other common law jurisdictions (i.e. jurisdiction of an arbitrator to make an award[1], serious irregularity[2], and legal error[3]), the Scottish law restricts ground of appeal to first instance decisions[4]. The law limits appeals to the Outer House whose ruling shall be considered to be final. There is no appeal to the Supreme Court. This makes Scotland laws emerge as pro-arbitration compared to other arbitration seats such as England and United States.

One of the advantages of arbitration is confidentiality. The Scottish Act does not only rely on common law doctrine to ensure confidentiality but the anonymity of the legal proceedings is safeguarded in the legislation. Under Section 15(1) “a party to any civil proceedings relating to arbitration may apply to the court for an order prohibiting the disclosure of the identity of a party to the arbitration in any report of the proceedings”. In rule 26(2), the tribunal and the parties must take reasonable steps to prevent unauthorised disclosure of confidential information by any third party involved in the conduct of arbitration”. This provision goes a long way in ensuring the parties of their confidentiality.

Under Rules 73 to 75, Scottish law provides an expansive immunity of the tribunal. Like it is stated in 73(1), “neither the tribunal nor any arbitrator is liable for anything done or omitted in the performance, or purported performance, of the tribunals functions” so long as the related function was done in good faith. Although the immunity can sometimes be misused, it may help the tribunals to make bold rulings without fear or favour. This is unlike where the immunity of the tribunal is limited like the case in English and Irish laws.

It is important to point out that while an arbitral law is important for the arbitration process, evaluating the relevance of a country in terms of seat of arbitration goes beyond the arbitration rules. The entire formal legal structure also has a great overbearing on the arbitration process. When this entire formal legal structure comes into mind, Scotland scores highly as a competitive seat of arbitration. As Dingwall observes, Scotland is “ideally placed as a neutral ground for international arbitration”[5]. According to Dingwall, “Scotland is one of the very few jurisdictions with a mixed legal system” having a combined elements of civil law traditions and common law doctrines. This makes the country a compromise between “North American and Continental European parties”.  An addition advantage of the Scottish law is that it does not have a “system of discovery of evidence”[6].

In addition to the new arbitration Act, the favourable environment for arbitration may make the “new boy” very attractive in the international arbitration. Scotland boasts of courts that pro-arbitration. The accessibility of Scotland may also count as a factor. More importantly, it might be cheaper to arbitrate in Scotland than in other countries. According to Dingwall, arbitration in Scotland is close to 40 per cent of the cost that it might take to arbitrate in New York or London.

With all these strengths notwithstanding, there have been murmurs that the Scottish law repeal of the Model Law might cost its international attractiveness[7]. However, as Dundas observes, the success of arbitration rules do not solely depend on strictly following the model law[8]. According to Dundas, the model law countries such as Singapore, Hong Kong and Vienna have succeed on other reasons that motivates the choice of an arbitral seat[9]. In fact, Dundas points out that despite London, New York, Paris, Stockholm, and Geneva being successive arbitration seats, they are non-model law countries.

In summary, the conformity of the Scottish Act with international arbitration regimes such as Model Law, the UNCITRAL rules and the New York convention has placed the Scotland at the forefront of the arbitration laws. More importantly the Scottish law is a blend of accomplished laws such as the England’s Arbitration Act 1996 and the Singapore’s Arbitration Rules[10]. The move to conform to the Model Law, the UNCITRAL Rules and art.6 of the ECHR goes a long way in sustaining arbitrators’ independence and impartiality. As party to the New York convention, Scotland has come out as a respecter to international arbitration awards. On the other hand, the Scottish Arbitration Rules are so comprehensive that arbitration may go smoothly even without the reference to the Act. However, there are still concerns that too much regulation is taking away the traditional role of arbiters and making the arbitration process look more like the court process.

 

 

 

 

 

 

Bibliography

Books & Journals

2010 international Arbitration Survey: Choices in international Arbitration

Born G ‘International Arbitration and Forum Selection Agreements: Drafting and Enforcing’ (Kluwer Law international, 2010)

Dingwall J, ‘International Arbitration in Scotland: A Bold, new Future’ [2010] 13/4 A.L.R: pp. 138-148

Dundas H, “The Arbitration (Scotland) Act 2010: Converting Vision into Reality. (Chartered Institute of Arbitrators, 2010)

Ferrari F & S Kroll, ‘Conflict of Laws in International Arbitration’, (Walter de Gruyter, 2010)

Friedland P, ‘Arbitration Clauses for International Contracts’, (Juris Publication, Inc., 2007)

Harris B et al, ‘Arbitration Act 1996: a Commentary’ (John Wiley & Sons, 2006)

Harris B, R Planterose, J Tecks, ‘The Arbitration Act 1996: A Commentary’ (John Wiley & Sons, 2008)

Kerstetter K, ‘Which Law Governs the Arbitration Agreement? An Analysis of Sulamerica CIA NAcional de Seguros S.A. and others v Enesa Engenharia S.A. and others’ Mark Humphries Legal 

Parish M, ‘Drafting international arbitration clauses’. International Arbitration Quarterly (March 2012) 

Paulsson J, N Rawding, & L Reed, ‘The Freshfields Guide to Arbitration and ADR: Clauses in International Contracts’ (Kluwer Law international, 2011)

Rainer D, ‘The Impact of West tankers on Parties’ Choice of a Seat of Arbitration’ [2010] 95 Cornell Law Review 431

Redfern A, ‘Law and Practice of International Commercial Arbitration’ (Sweet & Maxwell, 2004), p.126

Turner R, ‘Arbitration Awards: A Practical Approach’ (Blackwell Publishing, 2005)

Wilson R & V Allan, “Arbitration in Scotland” in CMS Guide to Arbitration [2013] < 

Zekos G, ‘International commercial and marine arbitration’ (Taylor and Francis, 2008)

Statutes

Arbitration (Scotland) Act 2010

Arbitration Act 1996

New York Convention

Singapore Arbitration Rules

UNCITRAL Rules

UNICTRAL Model Law

Cases

Amin Rasheed Shipping Corporation v. Kuwait Insurance Co [1984] 1 AC 50

Arsanovia Ltd and others v Cruz City 1 Mauritius Holdings [2012] EWHC 3702 (Comm)

Black-Clawson International Ltd v Papierwerke Waldhof-Aschaffenburg AG [1975] AC 591 at 598 12

Braes of Doune Wind Farm (Scotland) Ltd v Alfred McAlpine Business Services Ltd [2008] EWHC 426

C v D [2007] EWCA Civ 1282

Chalbury MccOuat International Ltd v PG Foils Ltd [2010] EWHC 2050

Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd [1993] AC 334

Dubai Islamic Bank PJSC v Paymentech Merchant Services Inc [2001] 1 Lloyd's Rep. 65

Fiona Trust & Holding Corp v Privolov [2007] UKHL 40, Para 17

Leibinger v Stryker Trauma GmbH [2006] APP LR 03/31

Shashoua and others v Sharma [2009] EWHC 957 (Comm)

Sonatrach Petroleum Corp v Ferrell International Ltd [2002] 1 All E.R. (Comm) 627

Sulamerica CIA Nacional de Seguros SA and others v Enesa Engenharia SA and others [2012] EWCA Civ 638

 Sumitomo Heavy Industries Ltd v Oil and Natural Gas Commission [1994] I Lloyd's Law Reports 45 at 56-7

Tor Corporate v Sinopec Group Star petroleum Corp Ltd [2007] CSOH 86

West Tankers Inc v Allianz Spa & Another [2012] EWCA Civ 27

XL Insurance Ltd v Owens Corning [2001] All ER (Comm) 530