PARTY tribunal” This law is applicable to

PARTY AUTONOMY

Introduction

 

Human being can be named as species with different desires and interest which may differs from one to another, therefore disputes are often resulted when their interest are conflicting with each other, even though they start to work together under an common agreement. When considering about the resolving of these kind of disputes, they can be resolved either by court proceedings or by alternative dispute resolution mechanisms namely, Arbitration, mediation, conciliation and negotiation. In this paper one of the most important element in domestic and International Commercial Arbitration, “party Autonomy” and whether it is a burden towards the procedure of arbitration is discussed. Comparative analysis with Nigerian law is also contained in this paper, this country was selected to compare as this act is comparatively new when comparing with the Sri Lankan Act. Choosing an applicable law in relation to the disputes rise between parties who are not nationals of a one country and which exceed the boundaries of a territory has not been an easy task but this principle of ‘Party Autonomy’ has provided solution for that problem. Principle of Party Autonomy is well established principle in Sri Lanka which is to be found in the Arbitration Act No.11 of 1995. Party Autonomy has been defined by Domke as,

 

“A process by which parties voluntarily refer their disputes to an impartial third person, an arbitrator, selected by them for a decision based on the evidence and arguments to be presented before the arbitration tribunal”

 

  This law is applicable to both domestic arbitration proceedings as well as arbitration proceedings conducted in Sri Lanka with one or more foreign parties which emphasize that the application of the law is not limited to the boundaries of the territory. Even in international level party autonomy is accepted principle, which is evident when referring in to the UNCITRIAL Model Act on International Commercial Arbitration and New York Convention but in the International level there are no public courts to resolve disputes arose in commercial arbitration.

 

Though the Arbitration Act of Sri Lanka has not provided a definition for the arbitration, arbitration can be defined as a process of justice providing through a private decision maker, in another word an arbitrator. Arbitrator is empowered to make the decision in the process of arbitration by parties to the dispute by an arbitration agreement. Strongest evidence for the party autonomy is the Arbitration agreement. Arbitration agreement can be in a form of and arbitration clause in a contract or it can be a separate agreement.  Arbitration agreement is defined in the Arbitration Act1 as,

 

  “arbitration agreement means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship whether contractual  or not.”

 

 Party Autonomy plays an important role in arbitration procedure as it enable to select an applicable law, arbitrator, award etc. Arbitrator is the neutral party selected by parties to the dispute in process of arbitration. Arbitrator is obligated to act in manner which is impartial, practical and expeditious. When considering about the process of arbitration amendment to the claims are available if it is appropriate and is within the scope of the arbitration agreement2. According to the Act both parties are given an equal opportunity to present their cases either in writing or orally.3 If a one party fails to appear without giving reasons arbitration procedure will carried out with the available materials.4

 

 

 

Findings and the Analysis

 

Party autonomy makes the arbitration procedure flexible by enabling parties to determine the place of arbitration5, number of arbitrators6, language of arbitration and the applicable law7 in the process of arbitration. Therefore party autonomy can be defined as a discretion given to parties in respect of resolving their disputes which is cheaper, flexible and effective but it should be noted that this resolution decision making power should be exercised in accordance with the law of the chosen arbitral institution.Though parties are free to choose the law some limitations are imposed by that chosen law’s mandatory requirements. Further desired law should be selected in good faith and should not be contrary to the public policies.

Before going in to the arbitration law in Sri Lanka it is important to identify the International law on Arbitration due to its direct influence in shaping domestic law in the country. As mentioned above New York Convention and the UNCITRAL Model Law are some of most important instruments in relation to arbitration in international arena.

New York Convention basically focused on the enforcement of foreign Arbitral awards. It recognized the concept of party autonomy but when it comes to the enforcement of arbitral awards a written agreement which includes arbitral clause or an arbitration agreement in the contract is a mandatory requirement8. Other limitations are contained in the Article V of the Convention.

 UNCITRAL (United Nations Commission on International Trade Law) Model Law on International Commercial Arbitration issued in1958 and revised in 2006 is also an important instrument when concerning the international commercial arbitration. This is formulated referring in to the same principles in New York Convention but it contained reforms to the New York Convention.9 Party Autonomy is a recognized principle in UNCITRAL Model laws as well as in New York Convention. It is evident when referring in to the Article 19(1) of the model laws as it states that,

 

“Subject to the provisions of this law, the parties are free to agree on the procedure to be followed by the arbitral tribunal in conducting the proceedings”

 

Written agreement is also and mandatory requirement even under this legal instrument.10 Further under the Article 18 of the model law it make the equal treatments in the process of arbitration and giving equal opportunities to the parties to present their case a mandatory requirement. Party autonomy cannot be named as an unfettered discretion given to parties when referring in to the Provisions of the UNCITRAL Model laws. Rights given to parties in concerning party autonomy has been balanced and safeguarded by imposing mandatory provisions which cannot be derogated. Some of such rules has been mentioned in above other mandatory requirements are that the parties should be treated with equality and each party should be given full opportunity for presenting his case11, party must be given notice regarding every hearing and requisite material must be supplied to the tribunal by the other party12and that award shall be in writing which should specify the date and place13.

When it comes to the limitation in International Commercial Arbitration. In generally, Equality treatment, third party, arbitration agreement arbitrability and institutional arbitration and public policy can be identified as limitations.14

Even in 19th century arbitration law was well established in Sri Lanka it was regulated by the Arbitration Ordinance No.15 of 1866 which only dealt with compulsory arbitration and the Civil Procedure Code of 1889 which dealt with both compulsory and voluntary arbitration. These law did not give effect to the provision of the New York Convention of 1958.15 Further parties had to face numerous difficulties in court proceedings which were conducted according to the Civil Procedure Code. The concept of party autonomy was not recognized during this time there for courts ware empowered to set aside or correct the award or remit the award for reconsideration or void the award or set aside on sated grounds.16 Due to these complications in the procedure modified version of law was enacted. This law embrace recognition and enforcement of foreign Arbitral Awards in New York Convention and the concept of party autonomy which sought out most of complications which parties had to face during their dispute resolution process. This manifest the desirability of the concept of party autonomy in the process of arbitration.

 Modern Arbitration Act in Sri Lanka came in to force 1st August 199517 and it goes in line with the UNCITRAL Model Law for some extent but it has not incorporated the comprehensive UNCITRAL arbitration rules.18 This Act repeals the Arbitration Ordinance (chapter 98) and section 693 to 698 of the Civil Procedure Code.19  Some of the important Section to be found in the Arbitration Act has been discussed previously. Apart from them Section 24 is an important Section which is about the Law applicable to substance of dispute and how arbitral tribunal shall decide the dispute in accordance with such rules of law. General Justice and fairness of trade will be used in delivering judgments only if it is expressly authorized by the parties. There is a type of an agreement called exclusion agreements under this agreements parties waive rights of appeal to Supreme Court. Part II of the Act declares that the arbitration agreement must be in writing and parties who entered in to agreements in order to resolve their disputes have to prepare the agreement without contradicting the public policies and the should be a matter capable of resolving through the Arbitration.20 Further it can be said that Sri Lankan Act had enacted adhering to the rules of natural justice when referring in to the section 15(2) of the Act as it make mandatory to give a fair hearing to both parties and a chance to present their cases before the final decision21.These mandatory requirements can be acknowledged as internationally recognized limitation as they can be found in either or both New York Contention and the UNCITRAL Model laws.

Distinction between modern and the old law relating to arbitration manifest that the concept of party autonomy is not and burden on parties but it release the burden which parties had to face if there were no concept called part autonomy.

When it comes to the judicial intervention relating to these kind of disputes which parties agreed to resolve through the arbitration. Parties can go for courts to resolve their dispute but both parties must be agreed for that, otherwise court is not empowered to hear those kind of cases. It should be noted that this only applies relating to the disputes which contained in the agreement.22 This emphasize the power given by Party Autonomy to parties to determine their disputes according to their will.

Standard of the domestic law cannot be determined alone therefor a comparison of the law of Nigeria will help to determine the standard of the Sri Lankan prevailing law. Arbitration and Conciliation Act 2004 govern the Arbitration law in Nigeria. It has been drafted in accordance with the UNCITRAL Model law on international commercial arbitration and New York convention23. This country facilitate enforcement of foreign commercial arbitration agreements render in any country that is a party to the New York Convention if they do not contradict the public polices of the country which is similar to the prevailing arbitration Law in Sri Lanka. Nigerian Arbitration Act also acknowledge the principles of natural justice. Section 14 of the Act recognize equal treatments and full opportunity to present their case. Further requirement of written agreement has been identified as a mandatory requirement. Nigeria Arbitration Act also prohibit the intervention of the court in arbitral proceeding, except in the limited circumstances provided by the Act. Apart from these provisions Party Autonomy is recognized and well established principle in Nigeria which enable the parties to choice the law, arbitrators, place of arbitration etc. Arbitration law in Nigeria is mostly tasked with three objectives namely fairness, impartiality and avoidance of unnecessary delay.24

Both countries had enacted the arbitration law adhering to the international law relating to commercial arbitration. Therefore limitations and mandatory requirements are similar to each other. Both countries respect the principle of natural justice. While giving the discretion to parties to determine their dispute according to their will laws of countries were able to regulate them in a fair and justifiable way. Nigerian law is comparatively younger than the Sri Lankan Law. Therefore it can be said that the Sri Lankan law is modern and a standard law.

 

 

Conclusion

One countries needs are not limited to the resource inside the country there for trades between countries are common in International commerce. Disputes relating to these transactions are inevitable there for parties entered in to agreements, deciding how they are going to resolve certain type of a dispute if it is arose before, during or after the contact. As discussed above international Commercial arbitration plays an important role in resolving these disputes while the concept of party autonomy plays the dictatorship of commercial arbitration process. Party autonomy guaranteed the certinity When considering about international commercial arbitration it is evident that transactions are not occurred between nationals of the same country significance of part autonomy gains special attention in these kind of situations as it enable parties to resolve their disputes according to their desired manner, they are free to appoint a decision maker who is free to frame his on procedure to conduct arbitration process, convenient for the both parties. Most importantly it protect the privacy of the parties, when companies enter in to commercial agreements usually it contains an arbitration clause for future disputes, reason behind this is to protect their trade secrets as all proceedings are confidential in arbitration process as there is no disclosure of information as in court procedures, if three were no concept as party autonomy companies will not be able to keep their trade secrets as secrets as they will have to go for court procedures.25 Apart from theses advantageous arbitration process can be named as a cost effective and efficient dispute resolution method with minimum or nonintervention of courts. Further arbitrator is not obligated to follow the rules in Civil Procedure Code or Evidence Ordinance in delivering the judgment. Party autonomy is not an absolute freedom given to parties in resolving their disputes as mentioned in earlier there are some requirement to be fulfilled by party to agreement such as agreement should be in writing, choice of law should be done in good faith without contradicting or evading public policies. Selection of place of arbitration is also important due to its influence on the process of arbitration. These restriction and limitation are important in order to regulate the concept of party autonomy otherwise the unfettered discretion given to parties may have led to new problem which cannot be mitigated through arbitration.

 

As well as the advantageous there are some disadvantageous in party autonomy. Arbitrator appointed by the parties will not be liable for negligence in respect of anything done or omitted to be done by him acting as the arbitrator but shall be liable for fraud in respect of anything done or omitted to be done in that capacity26, Unenforceability of the interlocutory orders of arbitrator and this can be identified as a waiver of the right to access the court. However advantageous of party autonomy override the disadvantageous there for it cannot be said as a burden for the parties in commercial arbitration. Parties are required to play active role in process of arbitration due to the concept of party autonomy but most of the time it is favorable to parties. If there was an international court to resolve dispute concerning commercial arbitration there will be lot of complications due to the application of a law, place etc. further party autonomy in arbitration helps to reduce the burden set upon the courts.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BIBLIOGRAPHY

Arbitration Act No 11 of 1995 of Sri Lanka

Arbitration and Conciliation Act 2004 of Nigeria

 

A.G.S Dursun, “A Critical Examination The Role Of Party Autonomy In International Arbitration” accessed 13th October 2017

 

F. Ferrari, “Limits to party Autonomy in International commercial Arbitration”

K. Kanag – Isvaran PC and S.S. Wijeratne, “Arbitration Law in Sri Lanka”, pg 38

L. Abeysekera, “Arbitration- Party Autonomy”

L. O. W. Odoe,  “party autonomy and enforceability of arbitration agreements and awards as the basis of arbitration” pg 78

M. Pryles, ” Limits to party autonomy in Arbitral procedure”

O. S. Perepelynska, “party autonomy v. mandatory rules in international arbitration”

New York Convention of 1958

Prof. P. Bajpai, ” Limitations of Party Autonomy in International Regime of Arbitration” http://journal.lawmantra.co.in/?p=162 assessed 30th September 2017

United Nations Commission on International Trade Law Model Law on International Commercial Arbitration 1958

 

 

 

1 Arbitration Act No 11 of 1995, s.50

2 Arbitration Act No 11 of 1995, s.15(4)

3 Arbitration Act No 11 of 1995, s.15(2)

4 Arbitration Act No 11 of 1995, s.15 (3)

5 Arbitration Act No 11 of 1995, s.16

6 Arbitration Act No 11 of 1995, s.06

7 Arbitration Act No 11 of 1995, s.17

8 Convention on the Recognition and Enforcement of Foreign Arbitral Awards ( New York 1958), Article II (2)

9 Prof. P. Bajpai, ” Limitations of Party Autonomy in International Regime of Arbitration” http://journal.lawmantra.co.in/?p=162 assessed 30th September 2017

10 UNCITRAL Model law, art. 7(2)

11 UNCITRAL Model Law, art. 18

12UNCITRAL Model Law, art 24(2), (3)

13 UNCITRAL Model Law, art 31 (1),(3),(4)

14 Prof. P. Bajpai, ” Limitations of Party Autonomy in International Regime of Arbitration” http://journal.lawmantra.co.in/?p=162 assessed 30th September 2017

 

15 K. Kanag – Isvaran PC and S.S. Wijeratne, “Arbitration Law in Sri Lanka”, pg 33

16 Ibid

17 K. Kanag – Isvaran PC and S.S. Wijeratne, “Arbitration Law in Sri Lanka”, pg 35

18 L. Abeysekera, “Arbitration- Party Autonomy”

19 K. Kanag – Isvaran PC and S.S. Wijeratne, “Arbitration Law in Sri Lanka”, pg 32

20 Arbitration Act No 11 of 1995, s.4

21 Arbitration Act No 11 of 1995, s.15(2)

22 K. Kanag – Isvaran PC and S.S. Wijeratne, “Arbitration Law in Sri Lanka”, pg 38

23 L. O. W. Odoe, ” PARTY AUTONOMY AND ENFORCEABILITY OF ARBITRATION   AGREEMENTS AND AWARDS AS THE BASIS OF ARBITRATION” pg 78

24  A.G.S Dursun, “A Critical Examination The Role Of Party Autonomy In International Arbitration” accessed 12th October 2017

25 A.G.S Dursun, “A Critical Examination The Role Of Party Autonomy In International Arbitration” accessed 13th October 2017

26 K. Kanag – Isvaran PC and S.S. Wijeratne, “Arbitration Law in Sri Lanka”, pg 38