Arbitrability of International Arbitration Agreements

Corporate Practice - SS LAW CODES

International arbitrator agreements stand as the bedrock upon which parties build their framework for resolving disputes. These agreements, often embedded within contracts or established as standalone documents, delineate the terms and procedures that govern arbitration proceedings.

Disputes are an inevitable aspect of conducting business across borders. However, rather than resorting to lengthy and costly litigation in national courts, many parties choose to resolve their disputes through international arbitration. Central to this process are international arbitrator agreements, which outline the terms and conditions governing the arbitration proceedings. In this article, we explore the legal effect of agreeing to arbitration, the jurisdiction and powers of arbitrators, and the concept of arbitrability.

 

The Legal Effect of Agreeing to Arbitration:

When parties enter into an international arbitrator agreement, they are essentially consenting to resolve their disputes through arbitration rather than through traditional litigation. This agreement is typically embodied in a contract clause or a separate arbitration agreement. By agreeing to arbitration, parties relinquish their right to have their dispute adjudicated in national courts and instead submit to the jurisdiction of the arbitral tribunal.

Key Aspects:
  • Enforceability: International arbitrator agreements are legally binding contracts, and parties are generally bound to comply with their terms.
  • Waiver of Rights: Parties waive their right to litigate their dispute in national courts when they agree to arbitration. This waiver extends to the right to appeal and other procedural rights associated with court proceedings.
  • Finality of Awards: Arbitral awards are generally binding and enforceable, providing parties with a final resolution to their dispute.

 

Jurisdiction and Powers of Arbitrators:

Arbitrators derive their authority from the arbitration agreement entered into by the parties. The jurisdiction and powers of arbitrators are typically defined by the terms of the arbitration agreement and relevant arbitration laws. Arbitrators have the authority to hear and decide disputes, make procedural rulings, and issue awards based on the evidence and arguments presented by the parties.

Key Aspects:
  • Consent-Based Jurisdiction: Arbitrators derive their jurisdiction from the consent of the parties. Therefore, arbitrators can only adjudicate disputes that fall within the scope of the arbitration agreement.
  • Procedural Flexibility: Arbitrators have the discretion to adopt procedural rules that best suit the circumstances of the case, subject to the requirements of fairness and due process.
  • Remedial Powers: Arbitrators have the authority to grant remedies and relief that are available under the governing law or the terms of the contract, including monetary damages, specific performance, and declaratory relief.

 

Arbitrability:

Arbitrability refers to the question of whether a particular dispute is capable of being resolved through arbitration. Not all disputes are arbitrable, and arbitrability may be subject to limitations imposed by law or public policy considerations. Common issues of arbitrability include disputes involving criminal matters, family law, or disputes that are considered non-justiciable.

Key Aspects:
  • Legal Framework: The arbitrability of a dispute is determined by the applicable law, including national arbitration laws, international conventions, and judicial precedent.
  • Public Policy Considerations: Arbitrability may be limited by public policy considerations, such as matters involving criminal conduct, antitrust violations, or disputes that are contrary to fundamental principles of justice and morality.
  • Contractual Agreement: The arbitrability of a dispute may also be determined by the terms of the arbitration agreement itself, which may expressly exclude certain types of disputes from arbitration.

 

Conclusion

International arbitrator agreements play a crucial role in facilitating the resolution of cross-border disputes through arbitration. By understanding the legal effect of agreeing to arbitration, the jurisdiction and powers of arbitrators, and the concept of arbitrability, parties can navigate the complexities of international arbitration with confidence, ensuring a fair and effective resolution of their disputes.

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