Costs Of Arbitration Research Articles

Contemporary Issues of Arbitration under UAE Law

Abstract This paper aims to discuss controversial issues encountered by arbitral tribunals assigned to decide a particular dispute under UAE law. These issues are mainly related to preserving principles of competence-competence and separability, which might adversely affect the validity of the procedures undertaken by arbitral tribunals or the validity of final awards rendered by an arbitral tribunal. The aforementioned problematic scenarios can be noted in the context of the formation of arbitral tribunal, ordering interim, arbitration costs and waiver of arbitration agreement. The study will deploy qualitative legal method, through which an analytical approach will be applied on the UAE Arbitration Law and Dubai International Arbitration Centre (DIAC) Rules in order to illuminate the gaps in both sets that may affect the evidential value of the procedures undertaken in the context of the abovementioned issues. This paper concluded with a set of suggestions aimed at filling the gaps observed in the UAE arbitration Law and DIAC Rules in terms of the aforementioned issues.

An evaluation of third-party funding in commercial arbitration

Arbitration as a dispute resolution mechanism aims to advance access to justice in accordance with Goal 16 of the United Nations Substantiable Development Goals (SDGs). One key issue in arbitration law and practice is the role of third-party funders in fundraising for the arbitration or even litigation process. Third Party Funding (TPF) has grown as a practice of financial responsibility for litigation or arbitration by sponsors that are not parties to a dispute, but whose interest is return for their investment. Such an arrangement may cover major litigation or arbitration costs, as well as other miscellaneous costs. The practice contradicts well established legal principles such as privity of contract and/or complements party autonomy, but the enormous advantages it offers, such as faster access to justice and investment opportunities cannot be ignored. Whilst the concept has developed in advanced countries it is yet to take shape in developing nations like Nigeria. The methodology deployed is doctrinal with primary and secondary sources being the content of Statutes, Bills and Case law. Online sources were also relied upon for secondary sources. The study found that TPF will assist in higher fundraising for litigation and arbitration, that it applies mainly to claimants and will increase access to justice. It is recommended that funds be made available to Defendants too and that developing countries should embrace the practice.

El acceso a la justicia arbitral: reflexiones sobre el amparo de pobreza en los procesos arbitrales en Colombia

This article explores the complex legal and constitutional implications of granting fee waivers in arbitration proceedings in Colombia. Fee waivers are a constitutional guarantee that exempts individuals from certain procedural costs in legal proceedings due to economic hardship, ensuring access to justice. However, its application in arbitration has been a subject of intense debate, as this figure is generally specific to ordinary courts. In this context, the inherent costs of arbitration, which are often higher than ordinary court proceedings, are analyzed. The principle of party autonomy is also considered, whereby agreeing to arbitration implies acceptance of associated costs. Critics argue that granting fee waivers could undermine this autonomy and the binding force of the arbitration agreement. Additionally, concerns about potential abuse and the contractual nature of arbitration as distinct from the judicial system are examined. Proponents and some scholars argue that denying fee waivers could effectively prevent those facing extreme economic difficulties from accessing arbitration, violating fundamental rights to access to justice and equality before the law. The article examines proposals for the exceptional and limited application of fee waivers in arbitration, subject to stringent standards. Alternative mechanisms to improve access to arbitral justice for the economically disadvantaged, such as subsidized services, legal aid programs, and specialized arbitration centers, are also discussed. The importance of ensuring equitable and equal access to arbitral justice to maintain the integrity, legitimacy, and effectiveness of arbitration as a dispute resolution mechanism is emphasized. A balanced approach is required that respects the principles of arbitration while upholding both constitutional and conventional guarantees. The article concludes with a call for reflection, open debate, and collaboration within the legal community to address this complex issue and shape the future trajectory of arbitration in Colombia.

THE EFFECTIVENESS OF ARBITRATION AS AN EXPENSIVE ALTERNATIVE DISPUTE RESOLUTION

<p>Arbitration is an alternative non-litigation dispute resolution which has great demand but it has many weaknesses including the high cost of arbitration and decisions that cannot be executed immediately if registration has not been made at the District Court. Thus, the purpose of the analysis are 1) to analyze the juridical value of arbitration when compared to dispute resolution by litigation and 2) to analyze the effectiveness of arbitration as an effort to settle disputes outside of the court system. This study employed a normative legal methodology. The following are the outcomes of this study: Arbitration is a form of alternative dispute resolution that is widely utilized by individuals, individuals and legal entities, between legal entities, etc. in the context of commercial law. Arbitration is widely chosen because dispute resolution is carried out in a closed, flexible and faster way than litigation and has binding legal force. Arbitration has more value, if the process is carried out correctly, observant in analyzing the problems and fulfilling the elements of the rules regarding the execution of the arbitral award. 2) The arbitration will be legally binding if the parties comply with the arbitration rules in the country where the matter will be executed.. Conclusion: arbitration remains an effective non-litigation dispute resolution option but must pay attention to the arbitration process and provisions so that the parties' awareness will arise to register the results of the arbitration decision and comply with the arbitration law applicable in each country.</p>

Research on Regulations of Third-Party Funding in IIA

In recent years, third-party funding (TPF) in international investment arbitration (IIA) has made a significant impact both in theory and practice. Nowadays, a Chinese law firm (the "PRC law firm") acted as the sole agent in the international investment arbitration case AsiaPhos v. China and the Chinese party won the lawsuit. One of the petitioners in the suit, AsiaPhos (Asiahua Group), claimed that its board of directors and its subsidiaries had entered into a formal financial aid agreement with a US-based fund, namely TPF. The financial support offers an opportunity to approach justice to applicants in economic distress or intending to share arbitration risks and also produces deterrence to the host state from any improper behaviors harming the interests of investors. However, on the one hand, due to commercial litigation, the arbitrators and investors will have a conflict of interest, on the other hand, third parties and investors usually live abroad, where governments lack the relevant information and competence that require international cooperation. In addition, the host country, especially the developing country, will also face the high cost of investment arbitration, and solving the problem must be needed for relevant mechanisms. This article discusses the application and development of TPF in IIA and analyzes the negative impact of TPF based on some legal issues, and then proposes the relevant rules and policy. On this basis, the study also provides suggestions for the practice of TPF from the perspective of the Chinese party to promote the development of TPF and puts forward advice for international investment rule-making balance in China.

The impacts of third-party funding on cost decisions in investment arbitration

ABSTRACT The involvement of Third-party Funding (TPF) in investment arbitration disrupts the balance between the parties to an arbitration. Though a party’s reliance on external funding represents its impecuniousness to participate in an arbitration, many financially sound investors take TPF to reduce the risk associated with bringing a claim or are unwilling to stick their working capital in arbitration. The existence of TPF in arbitration is a material factor in deciding an order for security for arbitration costs. The third-party funder funds an investor to initiate arbitration and gets benefits from a cost award. However, the funder does not share an investor’s responsibility to pay an adverse cost. The funder’s immunity from adverse costs aggravates the demand for security for costs in a funded arbitration. While a claimant’s reliance on TPF is considered a material factor in issuing an order for security for its cost, this consideration, counter-wise, legitimizes the cost of funding as arbitration costs. Accordingly, the funding cost can be recoverable through an adverse cost award. The TPF consideration in an order for security for costs makes the funding arrangement a part of the arbitration proceedings. If the funding position of a party is considered in deciding an application for security for costs, it deserves equal consideration in awarding adverse arbitration costs. Establishing the funding cost as arbitration costs will increase the cost of the international arbitration and unjustly transfer public money to private entities.

ARBITRATION IN CHINA AND ASEAN: ISSUES AND CHALLENGES

This paper seeks to explore key issues and challenges impacting trade and business disputes between China and ASEAN countries. Arbitration has become increasingly popular as a dispute resolution mechanism in China and ASEAN, especially with the rise of cross-border transactions and foreign investment. However, there are several challenges and issues associated with arbitration in the region. One major challenge is the lack of uniformity and clarity in the legal framework. There is a diverse legal system in the region, and the inconsistency in the arbitration laws and regulations makes it difficult for parties to agree on the arbitration process. Another challenge is the shortage of qualified arbitrators in the region, which can lead to delays and affect the quality of arbitration awards. The cost of arbitration is also an issue, and the lack of transparency in the cost structure can create disputes between parties, further delaying the arbitration process. The lack of public awareness and education about arbitration is another challenge, which can lead to parties opting for traditional litigation methods. Finally, the lack of transparency in the arbitration process can create mistrust among parties, affecting the credibility of the process. Addressing these challenges will require collaboration between governments, arbitration institutions, and stakeholders in the region to ensure the effectiveness and efficiency of the arbitration process.

THE ROLE OF THE STATE IN INTERNATIONAL INVESTMENT ARBITRATION IN CONNECTION WITH THE ARMED CONFLICT

This article deals with the characteristics of using international investment arbitration as a mechanism for obtaining redress for damages caused during Russian aggression. Taking into account certain shortcomings of this legal remedy, the author highlights the State's role in leveling issues related to arbitration costs and protecting the rights of small and medium-sized enterprises. The article contains an analysis of the subrogation clause in the Agreement between the Government of the Russian Federation and Cabinet of Ministers of Ukraine on encouragement and mutual protection of investments of November 27, 1998, as well as an alleged procedure for its implementation. The existing practice of horizontal investment lawsuits is also disclosed as an alternative. The author cites the existing practice of interpreting the Agreement on the example of investment arbitrations in the so-called “Crimean cases,” demonstrating its relevance for subjects in the newly occupied territories. The article includes a summary of the advantages and disadvantages of international investment arbitration in the Ukrainian context and the author's recommendations on non-standard methods of obtaining compensation in the context of an international armed conflict.

Arbitrating During and Post Covid-19: Nigeria and the Imperativeness of Adopting a Legal Framework on Third-Party Funding

The advent of Covid-19 has led to the inability of parties fulfilling their commercial and contractual obligations. This inability has led to disputes and has negatively affected the financial fortune of many persons and businesses so that they may not afford or solely bear the cost of funding arbitration. To ensure that parties’ intention to arbitrate their disputes is not frustrated, Third-party funding (TPF), an acceptable practice in jurisdictions such as the United Kingdom (UK), Singapore, and Hong Kong, is a possible solution. Unfortunately, TPF is unknown to Nigerian law as it offends the common law doctrines of champerty and maintenance. This article, through a doctrinal methodology, examines the legislative effort towards institutionalising TPF in Nigeria and the ethical concerns advanced against it. The article argues that these concerns are more imaginary than real. Hence, they ought not to deter the adoption of TPF in Nigeria for intra- and post-Covid-19 funding of arbitration. It discusses the practice of TPF in the UK, Hong Kong, Singapore, South Africa, Ghana, and France in which these ethical concerns have been dealt with and draws lessons for Nigeria.

THE RATIONALE BEHIND CHOOSING ARBITRATION OVER LITIGATION: A LAW & ECONOMICS PERSPECTIVE

In the contemporary globalised economy, popularity of arbitration as a dispute resolution method has amplified. It has many advantageous features such as expertise of arbitrator, speedy procedure, party autonomy, confidential proceedings, which lack in litigation, thereby making arbitration the preferred mode of dispute resolution. The growth of arbitration is also credited to its stakeholders, namely the arbitrator(s) and the parties. The stakeholders take part in arbitration to derive maximum utility for themselves. They make decisions in the process which are backed by economic considerations. Cost and incentives become the major determinants, guiding their rationale supporting ‘the choice of arbitration’. This paper studies the mechanism of arbitration through Law and Economics lens. It is divided into five parts. Part I introduces the theme and builds up conceptual framework for the ideas presented. Part II explores the incentives available to the parties to choose arbitration over litigation. Part III discusses the incentives available to arbitrator, which encourages them to constantly work on their skill to remain relevant in the highly competitive market of arbitration. This part also makes comparison between the incentives available to judges of traditional court with that of arbitrators. Part IV examines the social costs of arbitration and determines whether arbitral award is a public good or a private good. Part V concludes the paper by outlining the key findings of this study.

The New Arbitration Law in Tanzania: An Appraisal of Its Salient Features and Implications for Investment Disputes Settlement

Preference for arbitration as an option for dispute settlement is steadily on the rise, partly because of its perceived efficacious proceedings and enforceability. In 2020, Tanzania enacted a new legislation on arbitration with a detailed and defined framework, cascading through the entire qualifying process of arbitrators, initiating the arbitration proceedings, enforcement and recognition of foreign arbitral awards. This article analyses the corpus of the new legislation, its pertinent structural features, the gaps, and future prospects. The analysis is predicated on the ramifications of the new arbitration law for investment dispute settlements, particularly, state versus investors disputes, as envisaged under the national investment legislation. It concludes by highlighting several aspects which need to be revisited, such as the independence of arbitrators, duty to refer disputes to arbitration, and determination of arbitration costs. Further, a case is made for amendment of the existing national investment legislation in respect of dispute settlement provisions in order to create a harmonious arbitration regime in Tanzania. Tanzania arbitration law, implications to investment disputes, enforcement of foreign arbitral awards

Between rags and riches: rethinking security for costs in international commercial arbitration

Abstract This article assesses the traditional approach adopted to making an order of security for costs in international arbitration, which focuses almost exclusively on the financial standing of the claimant. The article argues that this approach is inappropriate, and has the potential to undermine the purpose of the remedy itself; namely, to protect a respondent who has been dragged into an arbitration against his will, and may subsequently struggle to enforce a costs award against the claimant if he is successful in due course. The author therefore argues that the financial position of the respondent—and the impact of the proceedings on that respondent—should be hardwired into the assessment undertaken by arbitral tribunals when considering whether to order the claimant to provide security for the respondent’s costs.

Investor-State vs. State-State Dispute Settlement1

International investment agreements have provoked intense criticism in the policy debate during recent years. Particularly contentious has been their “ISDS” mechanisms, which enable investors to bring disputes against host countries. This paper examines whether host countries would be better off with state-state dispute settlement (SSDS), as often alleged, assuming that SSDS cause political/diplomatic arbitration costs that are not present with ISDS. Two separate reasons why host countries might benefit from SSDS are identified, but neither provides a convincing argument for host countries to move to SSDS. The paper concludes that host countries should reduce the stringency of their agreements, rather than introduce imperfections in the dispute settlement systems to reduce their bite.​

Interocean v Nigeria: Can a Domestic Investment Statute Provide the Basis for Claims under Customary International law?

In an Award dated 6 October 2020 (Award), the Tribunal in Interocean Oil Development Company and Interocean Oil Exploration Company v Federal Republic of Nigeria3 dismissed all the claims brought by two United States oil companies, Interocean Oil Development Company and Interocean Oil Exploration Company (Interocean), against Nigeria, and awarded arbitration costs to Nigeria. The Award confirms the possibility of bringing an investment claim for breach of customary international law based solely on a domestic investment statute. In doing so, the Award has not only expanded the potential scope of investment claims for foreign investors in Nigeria, especially for those who are not eligible for substantive protections under any investment treaties; it has also enriched investment arbitration jurisprudence. The Award is a landmark decision in Nigeria because it arose from the first investment arbitration instituted against Nigeria with a decision on the merits. Prior to the Interocean case, two...

Disrupt the Gambler’s Nirvana: Security for Costs in Investment Arbitration Supported by Third-Party Funding

ABSTRACT Third-party funding is a recent yet rapidly growing phenomenon in investment arbitration. While it enables investors lacking funds to pursue remedies against States, it exposes States to greater risk of inability to recover arbitration costs. Against this background, this article examines the legal principles on security for costs and, contrary to the view of several tribunals and commentators, it argues that in cases involving third-party funding and the funding agreement does not cover potential adverse costs, there is a presumption in favour of ordering security for costs. However, as revealed in recent decisions in Herzig, the current legal framework on security for costs, which is predicated on the bilateral investor–State relationship, is ill-suited to regulate the tripartite relationship involving third-party funders. Unfortunately, the discussions on Investor–State dispute settlement reform and the current proposal by the International Centre for Settlement of Investment Disputes (ICSID) on the ICSID Rules amendment have largely overlooked this problem. Thus, this article urges policy-makers to develop new rules to regulate the tripartite relationship involving third-party funders.

The Advance on Costs in Arbitration: Reimbursement of Substituted Payment

This article explores the issues arising from the refusal of a respondent to pay its share of the advance on costs in an arbitration, the claimant’s substituted payment in respect of it, and the claimant’s entitlement to immediate reimbursement by the respondent before the final award is rendered and costs are allocated. The article will discuss the position under various institutional rules and draw a comparative analysis between them. It will also explore the legal basis of a claim for reimbursement, consider the approach that arbitral tribunals should adopt when granting relief, and examine a recent partial award in a Doha-seated International Chamber of Commerce (ICC) arbitration which ordered the immediate reimbursement of a substituted payment of the advance on costs. arbitration, advance on costs, substituted payment, immediate reimbursement, award, order

Effective dispute prevention and resolution through proactive contract design

Research shows that strategic dispute resolution and early intervention reduce direct and indirect costs of conflicts. Minimal costs are involved in preventing and de-escalating disputes, compared with the costs of arbitration and litigation, for example. In this context, the traditional view of contracts as legal documents or reactive enforcement mechanisms is too narrow. Contracts can be used proactively, ex ante, too, enhancing the parties’ chances of success and preventing unnecessary problems. In Europe, this is part of what is known as Proactive Law; in the US, Preventive Law. On both sides of the Atlantic, it can also be framed as practicing proactive contracting or proactive contract design. Well-designed contracting processes and documents can prevent misaligned expectations and disappointments so that unnecessary disputes can be avoided. Early intervention methods of dispute resolution, such as mediation, can be used to de-escalate the dispute and promote cooperation. Along with other crucial elements, contracts can provide pre-agreed procedures and resolution mechanisms if changes, delays, or disturbances occur or a conflict situation arises. Building on our previous work on civil and commercial mediation and a managerial-legal view on contracts and their design we illustrate, with examples, how proactive contract design, combined with early intervention procedures and monitoring systems as well as post-award management processes can be used to better deal with the commercial, legal and human elements of a dispute. With a focus on commercial business-to-business contracts and related conflicts we explore how design methods can be used to address the root causes of legal disputes and to operationalize an effective dispute prevention and resolution system.

The Interface between Access to Justice and Arbitration in Kenya

The right of access to justice is codified under Article 48 of the Constitution of Kenya 2010 and various international conventions.1 The right to access justice is considered to be an inalienable human right. It is on this basis that this paper questions to what extent does arbitration as a mode of dispute resolution promote or inhibit access to justice as a fundamental human right. The attributes2 associated with arbitration as a means of settlement of disputes are considered to promote access to justice to a great extent. However, on the other hand, certain aspects associated with arbitration are considered to inhibit access to justice. For example; high costs associated with arbitration, confidential nature of arbitration is considered to limit the right to access to information especially in public interest cases and the lack of the principle of stare decisis in arbitration. It is, however, notable that arbitration is considered to have inherent ways of addressing the aspects that are associated with it and are considered to inhibit and/or limit access to justice. For example; consent to enter into an arbitration agreement is considered to address the issue of high costs in arbitration considered to be a limitation to the right of access to justice. Premised on the foregoing, this paper seeks to conceptualize the right of access to justice in arbitration as a mode of settlement of disputes.

Forensics at the Port: Can Diagnostic Testing Benefit Trade?

A growing pool of genomic knowledge and remarkable reductions in the cost of genetic sequencing is revolutionizing the identification of plant pathogens and phytosanitary risks. This article examines available technologies of plant testing for genetics, residues, and contamination that can be imposed at port locations for the trade of bulk commodity crops. Access and deployment of lower-cost detection technologies could fundamentally change phytosanitary practices with potential consequences for agricultural trade. Investment in testing for the presence of transgenic dockage or plant and soil diseases will likely decrease time and arbitration costs. Implementation of diagnostics testing could not only protect the exporters’ position, but it could also lead to future implications of trusted trade or higher standards of phytosanitary policy. The lack of rigorous export testing creates the opportunity for trade protectionist countries to claim that commodity imports fail to meet import standards, which can either lower the price or result in shipment rejection. The failure of commodity shipments to comply with import thresholds is a regular occurrence, yet resolutions are achieved that do not disrupt international trade. This rise in the ability to accurately test for pathogen detection provides the opportunity for safer commodity trade, but also the rise in protectionism.

Exploring the prospects of host-state counterclaims in corruption disputes

Abstract While the regime of investment treaty arbitration has evolved manifold over the decades, has the position of the host-states as a Respondent improved? The authors argue that it has not. Bilateral Investment Treaties (hereinafter BIT(s)) are still asymmetrical in nature where the states are obliged to protect the rights of the foreign investors but are not provided with any remedy against the corrupt activities of the investors. While tribunals have denied jurisdiction over the investors’ claims tainted with corruption, they have provided states with no consequent remedy against such investors. Consequently, the states have to first bear the loss of a failed investment in its territory and then pay for the exorbitant costs of international arbitration as well. Where scholars are arguing for attribution of liability of corrupt activities of the public officials to the states, the authors here raise an important question of what if the liability cannot be attributed to the states due to lack of apparent authority? Should the states be then allowed to move forward from the jurisdictional stage to raise counterclaims to seek damages for the loss caused by the investors? In this article, the authors explore these questions and present arguments in favour of the inclusion of corruption-based counterclaims.