Intention Parties in International Commercial Arbitration

INTENTION PARTIES IN INTERNATIONAL COMMERCIAL ARBITRATION
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Word Count: 2002 Words
QUESTION 1
The contractual basis of arbitration has been frequently reaffirmed in legislation. One of the most important consequences of this reaffirmation in general terms is that international arbitration is subject to the parties’ intention and not the practical rule of law of the position of the arbitration. This explains why the judicial systems of international arbitration do not weaken the quality based principle of party independence. On the other hand, international arbitration owes its success to the development of permanent arbitral institutions and the participation of these institutions reducing the role of parties. The contract between these parties is the main component of international arbitration. It is these parties shared interest that confers powers upon the arbitrators.
Another important role of intention played by the parties is that their consent provides a foundation for the authority of the arbitrator to make decision regarding the dispute. In addition, the parties consent limits the arbitrator’s authority because decisions can only be made within the extent of the initial parties’ concurrence. The arbitrators are also expected to choose laws in regard to the parties’ choices. Rule and procedures must also adhere to the parties’ choice and initial agreement. This ability to choose the set laws to be used in the arbitration is based on the autonomy of the parties involved in the contract. For example, the US federal law and the international arbitration treaties recognize the impertinence of observing party autonomy. In general cases, the arbitrator is always served with a written consent from the parties for any future resolution of a dispute between them. However, submission agreement can also be signed should a dispute arise when the parties do not have an arbitration clause in their contract.
Parties in international commercial agreement have the right of choice of laws to be used in the application of the contract. This principle is commonly referred to as the doctrine of party independence. Jansen stated that ‘this principle act contains the power of the parties in making prior choices and making choices of the laws to be used in the execution of the arbitration’. This party autonomy provides the contracting parties with an opportunity to avoid the application of laws that are unfavorable to international business or dispute. For this reason, Julian, Stefan & Loukas argues that the “arbitral tribunal shall make decisions regarding the dispute based on the rules and laws chosen by the parties in the dispute as they are applicable to the substance of dispute” (Julian, Stefan & Loukas, above n 415 . Any other description of law or a legal structure of any given state or country shall be interpreted, unless otherwise expressed, as directly referring to the given law of the specified country and not to its conflict of laws rules. In addition, the arbitrator decides on which move to take in the solution of the dispute in accordance with the set of laws chosen by the parties. Should the chosen set of laws be missing, the arbitrator will make decision depending on their own choice believing that their choice is the most preferable.
The parties also play a major role in the decision of laws to be applied by the arbitral tribunal on the merits of the dispute. For this reason, the arbitrator is bound to pertain to the merits of the dispute the system of the law chosen by the parties. According to Moses ‘the rule may not be new to the arbitration because they are the same rules involving contractual agreements in international businesses’.
QUESTION 2
The intention of parties becomes decisive in international commercial arbitration subject to agreement in force between the host state and any other state(s). This implies that the host party’s state laws must be in agreement with the legislative system of other countries that might be involved in the same commercial agreement. Noussia stated that ‘this law applies to ensure that the arbitrators are not biased in the ruling. It also applies to ensure harmony and concurrence in decision making’.
Intention of parties also become decisive in determining the applicable law in the international commercial arbitration when the court before which the dispute is brought finds that the agreement is null and void. This follows a party’s request not later than the day of submission of the initial statement on the dispute. In addition, this law applies when a party feels the contract is inoperative or cannot be performed in future. An award may be given to the winning party pending court cases. Furthermore, the intention of parties becomes decisive when the arbitration agreement is not compatible with the interim measures by court. Consequently, intention of parties becomes decisive in choosing the applicable law when an arbitral award is recognized as binding. This is done irrespective of the country to which the agreement was written. Again, this article becomes decisive as long as a written application is made to the competent court in international commercial arbitration. This is done upon the production of a duly completed and authenticated copy of original award by the arbitration applicant. The arbitration agreement must also be produced to support the act for choosing the applicable laws in making the decisions.
When parties involved in international business contracts at the time of conclusion of their arbitration agreement are residents of different states or if they do not share the same business area can lead to the determination of which law to be applied. This is applicable because both parties do not particularly share the same legal system. This law can also take effect when the place of arbitration is situated outside the state in which the parties have their business operating. This applies if the location of the arbitration is determined in, or pursuant to the arbitration accord. In addition, intention of parties can take effect when any place of the substantial part of the obligation of the commercial relationship to be performed is out of the state in which the parties carry their business. Again, this law can take effect when the place with which the subject of context of the dispute is closely connected to the place where the businesses are situated or one of the parties is situated. In some cases, the intention of parties decides on which laws to be applied when both parties have agreed that the main issues in the arbitration agreement relates to more than one country or nation.
Intension of parties becomes decisive in the determination of an applicable law in international commercial arbitration if one party has several places of business...