IntroductionArbitration on International Commercial Arbitration, parties to an

IntroductionArbitration as a method of dispute resolution was well established under Roman Law by the first century BC. Under Roman Law the parties of a dispute entered into an agreement called a ‘compromissum’ to submit to arbitration abide by the Arbitration award.1 Arbitration is based on a mutual agreement with of both parties. The ability to determine the procedure of resolution of the dispute arise from the said agreement is named as party autonomy. “Party autonomy is the guiding principle in determining the procedure to be followed in an international commercial arbitration. It is a principle that has been endorsed not only in national laws but by international arbitration institutions and organizations. The legislative history of the model law shows that the principle was adopted without opposition….”2According to Article 19(1) of UNCITRIAL Model Law on International Commercial Arbitration, parties to an agreement are free to be followed by the arbitral tribunal in conducting the proceedings. However part autonomy proclaims that parties to the arbitration agreement are independent not only to choose laws but also to conduct the arbitration process.The process of arbitration possesses certain characteristics as Arbitration Agreement, Dispute, Reference to a third party and an Award. According to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958, the agreement to arbitrate must be in writing. There are two types of Arbitration Agreement as Arbitration Clause which is drawn up and agreed before the dispute has arisen, and submission agreement which is made after the dispute has actually arisen. Key element to arbitration process is a Dispute which is capable of settling down through arbitration. The next characteristic is referring to a third party which includes 3 people. The jurisdiction is decided by the agreement and rules of procedure are not a must. Rules of natural justice shall be followed at every instance. Finally the Award. If the parties to the arbitration process reach a settlement then the arbitral proceedings may terminated and record the settlement in a form of an arbitral award on agreed terms. If the parties were not able to reach for a settlement arbitral tribunal record it in a form of written award and it is subjected to legal proceedings. Arbitration process generally begins with one party giving notice to the other party presenting their intention to arbitrate the dispute. That includes the nature and1 Lord Hacking D, ‘Arbitration in modern world ‘ 2002 66(3) The journal of the charted institute of Arbitrators2 Red Fern and Blackuby Hunter , Law and practice of International Commercial Arbitration (4th edn, 2004) 315the basis of the proceedings, after receiving a certain time period the other party respond in writing indicating whether they agreed to resolve the dispute through arbitration. Party autonomy is visible at this point as parties having a chance to determine that they will seek arbitration remedies and not legal proceedings. Then the arbitration process begins, based on rules and procedures selected by the parties. Selection of the arbitrators is also done with the agreement of the both parties. After this, process is somewhat similar to courtroom trial. Parties make arguments before arbitrators, call witnesses and present evidence to establish and defend their respective cases. Once the hearing is concluded an arbitrator or panel is given a certain amount of time to consider the decision and give an award.Findings and IssuesHowever arbitration is often used for the resolution of commercial disputes, in certain countries such as the United States, United Kingdom, European Union, Middle East Countries, India and African Countries particularly in the context of international commercial transactions. Most of the developed countries have a advanced procedure for arbitration and practice of party autonomy. Out of European countries Scotland hold a main place. That was because of the newly implemented Act on Arbitration in 2010. In below paragraphs that will be further discussed.Party autonomy is based on choice of law in contract.3 In international commercial arbitration parties for arbitration agreement are free not only to choose laws but also to conduct the arbitration process. There are certain positive concerns to use party autonomy. The primary advantage of party autonomy is that the parties can choose a law that they are familiar with and whose provisions are suitable for the agreement in question. Secondly the privacy and confidentiality retain through party autonomy to arbitration. Most of the arbitration agreements are between million worth businessmen, such persons do not want their internal issues to be published as they are rich with trade secrets. So unlike a court proceeding arbitral tribunal will be held at a selected place by the parties and in front of the arbitrators whom they themselves selected. Therefore whatever happens in that place would not be published without consent of the parties. The second concern is the cost, speed and the procedure. It is a well -known fact that normal legal proceedings drawn for ages, simultaneously the cost as well. All such issues can be3 Dicey and others,The Conflict of Laws(14th edn, Sweet and Maxwell 2010) 32excluded when an arbitration process is followed. Neutrality in arbitration process is another merit. In normal legal proceedings courts have, or are at least perceived to have, an inherent national prejudice. Judges are drawn from that nationality. They do not necessarily have the knowledge of, or ability to handle, disputes arising from international business transactions or even disputes between parties from different countries so less bias judgment can be hardly expected from them. By contrast to the perceived partiality of a national court, an arbitration tribunal is thought to be neutral. It can be established with its seat in a country with which neither party has any connection; arbitrators can be selected from different countries and with different nationalities, and the tribunal is independent of direct national influence. This neutrality gives arbitration independence and a loyalty primarily to the parties. So it should be noted that whatever the advantage arbitration owes is a result of exercising party autonomy.Anyhow as a coin have both sides party autonomy also retain some disadvantages. As mentioned above arbitration agreements are mostly used by actual wealthy individuals who have capacity of spending any amount of money for a profit. And also arbitrators are private individuals since the money plays an important role in these proceedings biasness is unavoidable. Subsequently as parties got the opportunity of choosing laws and procedures they are free to deliberately avoid the issues that should be considered. The And also a decision or an award given by the arbitral tribunal will not be mandatory and if the award was not enforced or if the parties refused to come into a settlement it will anyways refer to court proceedings. So the cost and time that had been spending on such proceeding will be useless. Limits to challenge the arbitration award are another drawback because of the existence of the effect of res judicata, there is no right of appeal of arbitration award even if the arbitrator makes a mistake of fact or law. However, there are some limitations on that rule, the exact limitations are difficult to define. So as merit of advantages of arbitration gained by party autonomy, disadvantages of arbitration are also a result of party autonomy. Because unless for that concept for the arbitration agreement, parties would not have such power. So in a way party autonomy can be comprehended as a burden to the process of arbitration.So it reveals that party autonomy will not guarantee uniform or predictable solutions for all issues. But up to a certain extent it does guarantee certainty uniformity and predictability for parties. 4Comparative analysisPrior to the passing of the Arbitration (Scotland) Act 2010 arbitration in Scotland had largely fallen out of use. Scottish Arbitration Law prior to 2010 was spread over numerous cases and statutes with some of the applicable provisions dating back to 1695.5 Those laws contained numerous lacunae. The 2010 Act codified the law of arbitration in Scotland.The perceived disadvantages are the potential for delay and expense caused by abuse of the arbitration process. This perception is largely a result of the previous system which allowed ‘stated case referrals’ (in terms of which the arbitrator at the request of one or both parties set out questions of law for determination by the court) to the Inner House (the Scottish appeal court). The potential for delay and expense as compared with litigation has been removed by the 2010 Act, and given the restrictions on the right of appeal or challenge; arbitration in Scotland has the potential to be considerably more cost effective than litigation. Key features of the 2010 Act attract international foreign practitioners as well. Arbitration in Scotland is a confidential process, and unlike the position in most jurisdictions, the duty to treat proceedings as confidential is backed up by legislation. If a challenge is made to court in respect of an arbitration, the courts will keep the parties’ names, and details of the case anonymous, so as to preserve confidentiality. It is possible to persuade the Court that the case should not be reported at all. There are no appeals on points of law where the arbitration is an international arbitration. Where the arbitration is ‘domestic’ the parties can exclude ‘legal error’ appeals by agreement. To reduce unnecessary court challenges, the Scottish Act limits appeals from the Court to the appeal court. There is no appeal to the Supreme Court.In Scotland its not only the Act which is there to govern the regulations of arbitration but Chartered Institute of Arbitrators (Scottish Branch) also provides its own Scottish Arbitration Code with terms intended to set out clearly and concisely all of the provisions which would4 Vita Food V Unus Shipping 1939 7 PC 39 (UKPC) 42.455 Brandon J malon, ‘Arbitration Guide’ 2013 4(12) International Bar Association Arbitration Committee Scotland 1-4apply to an arbitration, whether domestic or international, in Scotland. The Code does not have the force of law. Instead it will be given effect in each arbitration by the prior consent of the parties to the arbitration. This is entirely in tune with the consensual nature of Scottish arbitration law and can be done either in an arbitration clause or simply prior to the arbitration commencing. One of the benefits of the code is an expedited 6 month process.Similarities of arbitration process in sri Lanka and Scotland along with recommendations from Scottish jurisdictionIn every Arbitration process characteristics are same and party autonomy is also practiced as it is the key feature of arbitration. Both Sri Lanka and Scotland has already developed a stable platform to arbitration yet it seems like there are certain differences between two countries. According to Sri Lankan Arbitration Act section 3(1) and (2) Arbitration Agreement may be in the form of a clause in a contract or in the form of separate agreement and it should be in written. In Scotland same provision is there with slight differences. For instance there is no requirement that an arbitration agreement must be in writing. Accordingly an oral agreement to arbitrate is likely to be enforceable. However, certain types of contract (for example those relating to land) must be in writing, and an arbitration clause in respect of such a contract would also need to be recorded in writing. If the award is to be enforced in another jurisdiction, the agreement must be in writing so as to comply with the New York Convention. And according to section 6 Sri Lankan Act parties are free to determine the number of the arbitrators and the selection of the arbitrators. In Scotland Parties are free to agree the identity of a sole arbitrator or tribunal. In the absence of agreement, the arbitration agreement will normally provide the mechanism for the appointment of the arbitrators, which may include nomination of individuals or reference to a professional body or arbitral institution. If institutional rules are used, the arbitrators will be appointed in accordance with those rules. In the event that no provision is made, or the provisions of the contract fail in respect of the appointment of one or more of the arbitrators to be appointed, either party may approach an Arbitral Appointment Referee (AAR) to make the necessary appointment. This is an instances where the party autonomy is used in both jurisdictions. According to section 16 of the Sri Lankan Act parties are free to decide the place of an arbitral tribunal, unless agreed any convenient place to all parties. Even though Scottish Act has mentioned Scotland will be the seat of arbitration furthermore itstates that “The fact that arbitration is seated in Scotland does not affect the substantive law to be used to decide the dispute.” Which is another occasion party autonomy is presented. And according to section 17 of the Sri Lankan Act parties are free to determine the procedure of the proceedings. In Scotland also that choice is given to the parties to the arbitration. These are the main similarities in the both Acts.But then again when the dissimilarities are focused it should be noted that Scotland Act is more precise regarding the enforcement of the laws and they have a separate code on going with the Act which make the Arbitration process in Scotland more stable.ConclusionIn the International ream if the parties wish to seek a binding method of resolving dispute through third party they do not have much choice, as there are no International public courts to resolve International commercial disputes. The only recourse available is either to head towards National courts (i.e. litigation) or for private international dispute resolution mechanism. For participants in International trade, the most efficient shelter to resolve their dispute has proved to be through International commercial arbitration (ICA). As mentioned above International commercial arbitration has proved to be one of the most efficient and successful mechanism to resolve disputes for participants in international trade. One of the reasons for its fame is the flexible approach towards its procedure. The idea which brings in this flexibility is “party autonomy”. From the analysis done earlier it revealed that there are drawbacks in party autonomy. So there should be a remedy for such drawbacks. That is the reason to impose certain limitations to party autonomy. Practice of ‘equality rule’ is an example. At times the rules chosen by the parties can be interpreted in such a way that it leads to unfair treatment, so here it becomes the duty of arbitrators and even National courts to maintain the basic attributes of the Institution of arbitration and restrict party autonomy. And also the arbitration agreement can only be enforced against the parties constituting it i.e. parties cannot agree on anything which has implications on third parties. The last but not the least is the most encountered restriction which is public policy. This restriction owes its existence to the concept of state sovereignty, thus every state can demarcate the boundaries within which arbitration can take place. Public policy is subject to no precise definition .But it can be said that it refers to the minimum rules to whichparties have to adhere. This concept depends on the cultural, social and economic tradition of each country.However Party autonomy was not whole heartedly accepted by the courts earlier as they considered it as a menace to their jurisdiction. They were afraid that such a principle would restrict the jurisdiction of judges6. Nevertheless as arbitration is a private settlement of dispute, parties can exercise their autonomy subject to these restrictions. These limitations do not abuse the freedom of the parties but in fact it is the knot that keeps the arbitration intact. If unlimited autonomy would have been granted then it would lead towards total chaos and the shadow of justice which follows arbitration would be lost somewhere. Unlimited freedom is a myth because it is improbable for the parties to have similar negotiating power or be equal economically or logically, which is the reason why there are limitations to this freedom. So it reveals “Party Autonomy rule” is one of the celebrated doctrines in Commercial Arbitration that is revealed through the Sri Lankan Arbitration Act and well as through Scotland Arbitration Act. Yet it is sometimes criticized as being a burden towards the same procedure of arbitration. It was discussed earlier how the application of party autonomy will be an issue to the arbitration process but at the same time it divulges that because of the limitations party autonomy had in national level as well as international level the above said “burden” will be faded.


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