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Arbitration is a Method of Dispute Resolution

We see in many emails about arbitration some confusion. We see it as a first task to clarify and sort out any misunderstanding and misinterpretation about arbitration.

An arbitration tribunal is NOT a replacement of a court.

Instead arbitration is - better: should be - an agreement between parties of a contract to solve any disputes between the parties which arise during the lifetime of a contract.( are based on different interpretations of a contract outside of any "official" court.) Any member of an arbitration tribunal is NOT a judge nor an "official court officer" or something assimilable. Any member is an arbitrator. An arbitration tribunal is not comparable to a High Court of Justice. Many countries allow an arbitration procedure based on an Act of Arbitration. The award of an arbitration tribunal may be deemed if the preliminaries of the act are met.

Arbitration is NOT a mapping between different law systems.

You cannot map the judicial framework of e.g. Germany to the judicial framework of New South Wales. But business partners from these countries may agree to an abitration procedure to work out any dispute in regards of their business contracts. CAcert Incorporated, located in new South Wales, offers a business service e.g. to german people. The service is the deployment of a functioning digital certificate. The service is offered for free and no costs. CAcert Incorporated is a legal body and may be a party in a litigation. CAcert Incorporated is bound to the legal framework of New South Wales. But can you bind a german individual to the legal framework of New South Wales? What will happen if a german community member seeks assistance at a german court? There are many legal bodies in Germany using the services of CAcert Inc. Yes, CAcert Incorporated is operating in an international environment.

First let us see what UNCITRAL is telling the world about arbitration. Later on we will show that a dispute resolution based on the Model Law of UNCITRAL is necessary to operate successful.

Please find the document here.

Let us start with page 24.

1. Inadequacy of domestic laws

6. Recurrent inadequacies to be found in outdated national laws include provisions that equate the arbitral process with court litigation and fragmentary provisions that fail to address all relevant substantive law issues. Even most of those laws that appear to be up-to-date and comprehensive were drafted with domestic arbitration primarily, if not exclusively, in mind. While this approach is understandable in view of the fact that even today the bulk of cases governed by arbitration law would be of a purely domestic nature, the unfortunate consequence is that traditional local concepts are imposed on international cases and the needs of modern practice are often not met. 7. The expectations of the parties as expressed in a chosen set of arbitration rules or a “one-off” arbitration agreement may be frustrated, especially by mandatory provisions of applicable law. Unexpected and undesired restrictions found in national laws may prevent the parties, for example, from submitting future disputes to arbi- tration, from selecting the arbitrator freely, or from having the arbitral proceedings conducted according to agreed rules of procedure and with no more court involve- ment than appropriate. Frustration may also ensue from non-mandatory provisions that may impose undesired requirements on unwary parties who may not think about the need to provide otherwise when drafting the arbitration agreement. Even the absence of any legislative provision may cause difficulties simply by leaving un- answered some of the many procedural issues relevant in arbitration and not always settled in the arbitration agreement. The Model Law is intended to reduce the risk of such possible frustration, difficulties or surprise.

2. Disparity between national laws

8. Problems stemming from inadequate arbitration laws or from the absence of specific legislation governing arbitration are aggravated by the fact that national laws differ widely. Such differences are a frequent source of concern in international arbitration, where at least one of the parties is, and often both parties are, confronted with foreign and unfamiliar provisions and procedures. Obtaining a full and precise account of the law applicable to the arbitration is, in such circumstances often expensive, impractical or impossible. 9. Uncertainty about the local law with the inherent risk of frustration may adversely affect the functioning of the arbitral process and also impact on the selec- tion of the place of arbitration. Due to such uncertainty, a party may hesitate or refuse to agree to a place, which for practical reasons would otherwise be appropri- ate. The range of places of arbitration acceptable to parties is thus widened and the smooth functioning of the arbitral proceedings is enhanced where States adopt the Model Law, which is easily recognizable, meets the specific needs of international commercial arbitration and provides an international standard based on solutions acceptable to parties from different legal systems.
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page 26

12. In respect of the term “commercial”, the Model Law provides no strict definition. The footnote to article 1 (1) calls for “a wide interpretation” and offers an illustrative and open-ended list of relationships that might be described as commercial in nature, “whether contractual or not”. The purpose of the footnote is to circumvent any technical difficulty that may arise, for example, in determining which transactions should be governed by a specific body of “commercial law” that may exist in some legal systems.
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page 30

4. Jurisdiction of arbitral tribunal

(a) Competence to rule on own jurisdiction 25. Article 16 (1) adopts the two important (not yet generally recognized) prin- ciples of “Kompetenz-Kompetenz” and of separability or autonomy of the arbitration clause. “Kompetenz-Kompetenz” means that the arbitral tribunal may independently rule on the question of whether it has jurisdiction, including any objections with respect to the existence or validity of the arbitration agreement, without having to resort to a court. Separability means that an arbitration clause shall be treated as an agreement independent of the other terms of the contract. As a consequence, a decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause. Detailed provisions in paragraph (2) require that any objections relating to the arbitrators’ jurisdiction be made at the earliest possible time.
26. The competence of the arbitral tribunal to rule on its own jurisdiction (i.e. on the foundation, content and extent of its mandate and power) is, of course, subject to court control. Where the arbitral tribunal rules as a preliminary question that it has jurisdiction, article 16 (3) allows for immediate court control in order to avoid waste of time and money. However, three procedural safeguards are added to reduce the risk and effect of dilatory tactics: short time-period for resort to court (30 days), court decision not appealable, and discretion of the arbitral tribunal to continue the proceedings and make an award while the matter is pending before the court. In those cases where the arbitral tribunal decides to combine its decision on jurisdic- tion with an award on the merits, judicial review on the question of jurisdiction is available in setting aside proceedings under article 34 or in enforcement proceedings under article 36.
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The reader is encouraged to study the comment section completely.

Let us now switch to the beginning of the document and point out the articles which are written.

From our point of view the articles 1 to 16 are the most important rules. Many national arbitration acts refer to these rules and will accept an arbitration award only if these rules are met. We show the Table of Content here so the reader will easily see what rules to inspect according to his interests.

Part One

Part Two

The are many wikipages which deal with UNCITRAL and arbitration.
The basic rules of UNCITRAL Arbitration Model Law have never been adopted by CAcert.