Read more about ARBITRATION



Arbitration as an Alternative Dispute Resolution For The Arisen Disputes Between Businesses



Arbitration has become a significant technique for settling various disputes, particularly in the context of international commerce. Arbitration from its very beginning correlated with international commerce which historically preceded Arbitration.

Now Individuals, companies, the big businesses and sometimes governments now settle their disputes with arbitration when there is a conflict or a predicted disagreement for the near future, identified or non-identified. Arbitration has become the ideal technique at the time of signing any commercial or civil contracts.

Governments no longer have the absolute power to settle the risen or predicted disputes among its citizens or between its citizens and the foreign parties. There are other legal systems also settle the disputes like mediation, conciliation , reconciliation and arbitration. Arbitration is the most effective of these techniques because the arbitration awards are legally equivalent to the national awards.

Arbitration is an agreement by two or more parties to settle a dispute or would probably arise between them in the future by referring the case to one or more persons appointed as arbitrators.

Arbitration depends on whether an arbitration clause was inserted by the parties in the contract, that it was inserted before the dispute arose, or happens on the basis of agreeing to settle their arisen dispute to arbitration. As following:

- An arbitration clause: is drafted in the contract.  For instance, company (A) signs a contract of sale for a number of cars to company (B).  Then, both companies agree to put an explicit term stating that arisen disputes, due to the execution of the contract terms or interpreting any term of it, should be settled by arbitration (this is an arbitration clause).

- Submission agreement: the parties did not agree to settle their disputes to arbitration.  In case a dispute appears to have arisen and the parties want to settle their dispute by the arbitration panel, away from the national judiciary, the parties sign an agreement that the dispute should be resolved by arbitration (this is a submission agreement).

Businesses prefer to settle their disputes through arbitration for the following reasons:

First, to save time and money, private businesses tend to prefer avoiding the hardships, common in their respective judicial systems.  Through litigation, one faces a lethargic, bureaucratic process with complex procedures that prolong the dispute.  This experience in one’s judicial system can be overwhelming and often leaves the proprietor suffering from some form of injustice – especially, when ‘time is money.’

Secondly, the need of the economic development for the developing countries forces them to settle the disputes between countries and the big companies by arbitration, which contribute a big share in achieving this development. These companies refuse to submit to the national judiciary for these reasons.

Thirdly, depending on the nature of the dispute, a judge, appointed by the state, may not be sufficiently educated in a particular area of knowledge. In arbitration, the arbitrator does not have to be a state appointed judge. He can be any person whom the parties involve determine to be qualified enough to pass judgment on the potential dispute. He could be a chemist or an engineer.

For instance, disputes among drug companies will require an arbitrator who understands the nature   of chemical substances like how to reserve it or the interactions within it.  Many drug companies may prefer an expert on the science of chemistry, instead of a judge of a country’s laws.

Fourthly, the details of a case may contain confidential material, pertaining to both parties.  Often, commercial contracts require a certain level of secrecy.  For instance, contracts that hold information about either the selling of industrial secrets or geometric design will require confidential care.  In lieu of arbitration’s out-of-court design – thus, out of the public eye, as well – the confidential details of a company will be guaranteed its appropriate degree of secrecy.)

Free decisions consider the representation of the free will of parties:

Parties’ will is basic in determining some essential procedures of arbitration. For instance, the free will to form the arbitral tribunal, seat of arbitration, the procedural law, substantive Rules, applicable law, and determining the time of the award and settling the dispute.

1- forming the tribunal:

Wide range of the arbitration laws and basis of international law centers give a wide range of freedom to the parties of the dispute to choose the arbitrators and forming the tribunal of arbitration which is appointed to settle the arisen dispute, under the condition to refer the dispute to an odd number of arbitrators.

2- Procedural law:

Arbitration allows to the parties of the dispute to determine the procedural law or the procedural rules of the tribunal. For instance, two companies from different nationalities one is from Egypt and the other from England, may both of them choose the American procedural law. With no doubt, this facilitates the work of the commercial enterprises in all over the world, which are linked together by contracts regardless of the nationality of the company or the partners of it.

3- Applicable law:

Arbitration allows the parties of the dispute to choose the law applicable to the substance of their dispute. For instance, one Saudi and one Egyptian company may choose the French civil law to settle their dispute.  With no doubt, this proves an essential advantage to the parties of the dispute as they will avoid using unknown laws for them. The national judge applies the rules of the national law but the arbitrator settles the dispute according to the law chosen by the parties.

At this point, the professionalism of the lawyer appears in drafting the arbitration clause or submission agreement and his accuracy to choose the applicable or procedural law according to the interest of his clients, without any article that may hurt them.

4- Seat of arbitration:

It is the place where the arbitration process takes place. Where the session, pleadings, submitting briefs, motions takes place and etc.

Parties to the arbitration are free to choose the seat of arbitration, for instance, two companies from Egypt they may choose Egypt, United States of America or London as the seat of arbitration.

5- Language of the arbitration:

Parties to the arbitration are free to choose the language of the arbitration. This includes language of the arguments, mutual briefs and the award. It may for two Arabic companies to choose the English language as the arbitration language.

6- Agree on putting a time limit when by the dispute shall be settled:

This is a significant advantage for the arbitration over the national judiciary because the parties of the dispute could agree on a time limit when by the dispute shall be settled and the arbitrators should comply with that. Parties could avoid the disadvantage of a slow national judiciary. Parties may agree to settle the dispute within six months starting by the day of the dispute or the day when the tribunal has formed.

The arbitral award is final and shall be enforced:

The most significant advantage of the arbitral award is that it is final and not subject to appeal according to most legal systems all over the world.  So the arbitral award is final and not subject to appeal unless the annulment of arbitral awards is filled and limited by reasons identified by the law.

The ability to enforce a foreign arbitration award in the majority of countries:

This is another significant advantage of the arbitration awards according to specific conditions and situations.  For instance, if a dispute arises between a Qatari company and an Egyptian company, then, both of them agreed to seat the arbitration tribunal in France and the arbitration award was issued in the interest of the Qatari company, so it may enforce it in Egypt and contrariwise according to a specific conditions and situations identified by international conventions and national laws.