Understanding International Arbitration: A Lex Mundus & Cencla Overview

Dr Osei Bonsu DICKSON, FCIMArb, ArbP., Global Vice-President, The Center for International Mediators and Arbitrators, and

Edith Asi Ayeh-DATEY,  LexMu International Arbitration Intern

International commercial arbitration stands out as an adjudicatory dispute resolution mechanism known for its inherent flexibility, albeit lacking a universal structure. While drafted rules exist to preserve its flexibility, there is a notable absence of universally prescribed rules. This book emphasizes the distinction between litigation, mediation, negotiation, and arbitration, elucidating four fundamental principles to demystify arbitration:

1. Third-Party Dispute Resolution: Arbitration serves as a third-party mechanism to resolve disputes impartially.
2. Private Nature: Being a private process, arbitration operates outside the public sphere, conducted under the control and confidentiality of the involved parties.
3. Rule-Centered Approach: Arbitration follows a rule-centered approach, guided by predetermined rules and procedures.
4. Adjudicatory Mechanism: Arbitration is an adjudicatory process, where an impartial body makes binding decisions on the dispute.

Rules for Arbitration:

1. Private in Nature: Arbitration is inherently private, conducted away from public scrutiny. Arbitrators, though performing adjudicatory roles, are not public servants. This privacy is considered the essence of private justice.
2. Consensuality of the Parties: Both parties must willingly agree to arbitration; coercion is not acceptable. This consensual aspect fosters a cooperative and collaborative approach to dispute resolution.
3. Party Autonomy is Central: The autonomy of the parties is pivotal in arbitration. Individuals have the freedom to shape the terms and conditions of the agreement, providing flexibility tailored to their specific needs.
4. International or Domestic: Arbitration can resolve both domestic and international disputes, with local laws determining the classification. The distinction is often based on cross-border commerce and differing legal frameworks.
5. Institutional or Ad Hoc: Parties may opt for institutional arbitration, utilizing permanent private or government-owned entities for administrative support. Alternatively, ad hoc arbitration, without institutional involvement, provides flexibility and avoids certain fees.
6. Awards are Final and Binding: Arbitral awards, once issued, have limited grounds for challenge. Unlike litigation, the finality of awards is a characteristic feature, offering a degree of certainty, albeit with some inherent risks.

Arbitration’s Potential Advantages:

1. Neutrality: The growth of international arbitration challenges the impartiality of court litigation systems. Arbitration allows parties to construct the dispute resolution process, promoting fairness and neutrality.
2. Comparatively Speedy: International arbitration, though not without its delays, is often faster than litigation. The process starts after the formation of a panel, which, once established, can expedite proceedings more efficiently than traditional litigation.
3. Expertise: A significant advantage is the availability of expertise. Arbitrators with specific industry knowledge can offer informed decisions, a crucial aspect when dealing with complex and specialized matters.
4. Enforceability: Most states support arbitration due to its efficiency and have enacted laws facilitating the enforcement of arbitral awards. The New York Convention stands as a testament to the global recognition and enforcement of arbitral decisions.

WHAT WE DO WITH THE LAW – Lex Mundus & Cencla PRUC

Strengthening Capacity of  the Center for International Mediators and Arbitrators (CIMA)

Background: The Center for International Mediators and Arbitrators (CIMA) recognized the need to enhance its capacity to meet the growing demand for mediation and arbitration services on the global stage. LexMu was engaged to provide comprehensive support in building the organization’s capacity, ensuring it remains at the forefront of international dispute resolution.

LexMu’s Expertise:

1. Strategic Needs Assessment: LexMu initiated a strategic needs assessment to identify gaps and opportunities within CIMA’s current capacity. This involved evaluating existing training programs, technological infrastructure, and international collaboration efforts.
2. Customized Training Programs: Leveraging its expertise in international dispute resolution, LexMu designed and implemented tailored training programs for CIMA. These programs covered diverse topics such as emerging trends in mediation and arbitration, technology integration, and cultural sensitivity in dispute resolution.
3. Technological Integration: Recognizing the importance of technology in modern dispute resolution, LexMu assisted CIMA in integrating cutting-edge technological tools. This included virtual mediation platforms, case management systems, and e-learning modules to enhance the organization’s overall efficiency.

Outcome: CIMA experienced a significant improvement in its capacity and capabilities after implementing LexMu’s recommendations. The customized training programs not only elevated the skills of its mediators and arbitrators but also positioned CIMA as a technologically advanced and globally competitive center for dispute resolution.

Building Legal Capacity of African Countries for Trade Agreement Disputes

Background: Several African countries, forming part of regional trade agreements, faced challenges in understanding and implementing complex legal frameworks. Recognizing the need for capacity-building, LexMu was engaged by a coalition of African countries to provide legal support and empower local entities in navigating international trade agreements.

LexMu’s Expertise:

1. Customized Legal Training: LexMu designed and delivered customized legal training programs tailored to the specific needs and challenges of each African country involved in the trade agreements. These programs covered topics such as international trade law, dispute resolution mechanisms, and compliance with global trade standards.
2. Legal Institutional Strengthening: Understanding the importance of robust legal institutions, LexMu collaborated with local legal bodies to strengthen their institutional capacities. This involved providing guidance on structuring effective legal frameworks, establishing specialized trade law divisions, and enhancing the expertise of legal professionals.
3. Support in Trade Negotiations: LexMu actively supported African countries in trade negotiations by providing legal expertise during discussions. This assistance aimed to ensure that the negotiated agreements were legally sound, fair, and aligned with the best interests of the participating countries.

Outcome: The capacity-building initiatives led by LexMu contributed to a more empowered and legally proficient environment for African countries engaged in trade agreements. Local legal institutions became more adept at handling international trade matters, fostering a conducive environment for economic growth, and strengthening the countries’ positions in global trade negotiations.

In sum, international arbitration provides a flexible and efficient means of resolving disputes, with its consensual and private nature offering parties significant advantages in achieving fair and binding outcomes.