ARBITRATION is defined as a method of dispute resolution involving one or more neutral third

parties who are usually agreed to by the disputing parties and whose decision is binding1.

In other words, it is a non-judicial legal technique for resolving disputes. An arbitrator may
consist of a single person or an arbitration board, usually of three members.

Arbitration is most commonly used in the resolution of commercial disputes and is distinct from
mediation and conciliation, both of which are common in the settlement of labour disputes
between management and labour unions. In mediation, the parties resort to a third person to offer
a recommendation for a settlement or to help them to reach a compromise. Such intervention by
a third party, which also occurs in international disputes between states in the form of diplomatic
intervention and good offices, has no binding force upon the disputants, unlike the arbitrator’s
ruling2.

COMMERCIAL ARBITRATION

Commercial arbitration is a means of settling disputes by referring them to a neutral person, an

arbitrator, selected by the parties for a decision based on the evidence and arguments presented
to the arbitration tribunal. The parties agree in advance that the decision will be accepted as final
and binding3.

Historically, commercial arbitration was used in resolving controversies between medieval

merchants in fairs and marketplaces in England and on the European continent and in the
Mediterranean and Baltic sea trade. The increased use of commercial arbitration became possible
after courts were empowered to enforce the parties’ agreement to arbitrate. The first such statute
was the English Arbitration Act of 1889, which was later consolidated into an act of 1950 and
adopted by arbitration statutes in most countries of the British Commonwealth. It was followed

1
Black's Law Dictionary (8th ed. 2004)
2
Encyclopedia Britannica https://www.britannica.com/topic/arbitration#ref212248
3
Ibid
in the United States by an arbitration statute of the state of New York in 1920 and the Federal
Arbitration Act of 1925. The latter dealt with the enforcement in federal courts of arbitration
agreements and awards in maritime transactions and those involving interstate and foreign
commerce. Most U.S. states adopted, sometimes with minor changes, the Uniform Arbitration
Act of 1955, as amended in 1956, which had been promoted by the Commissioners on Uniform
State Laws and recommended by the American Bar Association. This act provided for the
judicial enforcement of an agreement to arbitrate existing and future disputes and thereby made
the arbitration agreement no longer revocable, as it had been under common law. It also provided
for the substitution of arbitrators in the event of a party’s failing to select an arbitrator and for a
suspension of any court action instituted in contravention of a voluntary arbitration agreement.
The courts thereby play an important role in implementing arbitration agreements and making
judicial assistance available against a recalcitrant party. This concept of modern arbitration law,
which recognizes the irrevocability of arbitration agreements and the enforceability of awards,
also prevails in the arbitration statutes of nearly all countries.

FUNCTION AND SCOPE

Arbitration customarily has been used for the settlement of disputes between members of trade
associations and between different exchanges in the securities and commodities trade. Form
contracts often contain a standard arbitration clause referring to specific arbitration rules.

The usefulness and significance of arbitration are demonstrated by its increasing use by the
business community and the legal profession in many countries of the world. An advantage of
arbitration can be the speed with which controversies can be resolved, compared with the long
delays of ordinary court procedure. The expert knowledge of arbitrators of the customs and
usages of a specific trade makes testimony by others and much documentation unnecessary and
thereby eliminates some expenses generally associated with court procedures. The privacy of the
arbitration procedure also is much valued by parties to the controversy; situations unfavourable
to the party’s credit or deficiencies in manufactured goods revealed in arbitration proceedings do
not become known to outsiders. There are, however, disadvantages in the arbitration process.
Because in Anglo-American practice arbitrators generally do not have to provide any reason to
accompany an award, it has been difficult to develop guidelines for the conduct of business
relations. Moreover, this uncertainty makes the arbitral decision less predictable. Further
obstacles to the wider use of commercial arbitration are the divergences in municipal laws and
court decisions that result in different interpretations of similar arbitration questions and the fact
that awards usually are not published.

Procedure

Because the arbitrator’s ability and fairness are the decisive elements in any arbitration, the
selection process is an important aspect of arbitration. Generally, both parties select an arbitrator
at the time a conflict arises or at the time the arbitration agreement is concluded. The two
arbitrators then select a chairman, forming a tribunal. The selection of arbitrators often is made
by agencies administering commercial arbitration under preestablished rules of procedure. These
organizations—various trade associations, produce exchanges, and chambers of commerce in
many countries—maintain panels of expert arbitrators. The parties may either make their own
selection or entrust the appointment of the arbitrators to the organization.

Challenges to the arbitration process are not uncommon. For example, a party may claim that no
valid arbitration agreement existed because the person signing the agreement had no authority to
do so or that a condition precedent to arbitration was not fulfilled. More often, arbitration is
contested on the ground that the specific controversy is not covered by the agreement. In such
cases, the issue of whether the arbitrator has authority to deal with the conflict is usually
determined by a court. The arbitration process is also sometimes challenged on the grounds that
an arbitrator lacked impartiality. Any such challenge generally can be maintained only after the
arbitration has been concluded, as courts are reluctant to interfere with the arbitration process
before an award has been rendered.

The arbitration process is governed by the rules agreed to in the arbitration agreement; otherwise,
the procedure is determined by the arbitrators. The arbitration proceedings must be conducted so
as to afford the parties a fair hearing on the basis of equality. The arbitrator generally has the
authority to request the parties and third persons to produce documentary evidence and to
enforce such a request by issuing subpoenas. If a party fails to appear at a properly convened
hearing without showing a legitimate cause, the arbitrator in most instances can proceed and
render an award after investigating the matter in dispute.

Under the law and arbitration practice of most countries, an award is valid and binding upon the
parties when rendered by a majority of the arbitrators unless the parties expressly request a
unanimous decision of the arbitrators. The statutory law of various countries and the rules of
agencies administering commercial arbitration contain provisions on the form, certification,
notification, and delivery of the award, with which requirements the arbitrator has to comply.

INTERNATIONAL COMMERCIAL ARBITRATION

International commercial arbitration between traders of different countries has long been
recognized by the business community and the legal profession as a suitable means of settling
trade controversies out of court. The procedure in international commercial arbitration is
basically the same as in domestic arbitration. In the mid-1960s, in order to establish more
uniformity in procedure and to make access to arbitration facilities more easily available, the
United Nations economic commissions published new rules applying to international arbitration
for Europe and Asia.

The development of international commercial arbitration was furthered by uniform arbitration

legislation prepared by the UN Conference on International Commercial Arbitration in 1958 and
by the Council of Europe and the Inter-American Juridical Committee of the Organization of
American States. One particularly difficult problem of international commercial arbitration is the
enforcement of awards in a country other than the one in which they were rendered. Statutory
municipal laws usually do not contain provisions for the enforcement of foreign awards, and
parties are faced with uncertainty about the law and practice of enforcement procedure in a
country other than their own.

International agreements facilitate the enforcement of foreign awards to the extent that no further
action is necessary in the country in which the award was rendered; the opposing debtor must
establish that the award has been set aside or that its effects have been suspended by a competent
authority, which thus shifts the burden of proof of the nonbinding character of the award to the
losing party. Further development of international commercial arbitration has been encouraged
by the UN Commission on International Trade Law, which aims at promoting the harmonization
and unification of laws in the field of international commercial arbitration.

ADVANTAGES AND DISADVANTAGES

1. Time- Speed may be the single greatest advantage to arbitration over litigation. Stories of
crowded court dockets are legion, and it is not unusual for a dispute to languish in court for
years. Although arbitrations can be slowed where they involve multiple parties or cross-border
disputes, more often than not they will be resolved more quickly than a dispute filed in court.
That hastens finality and it enables the litigants to spend less time litigating, and more time
running their businesses.

2. Cost – arbitration is sometimes cheaper than litigation particularly where the parties achieve
procedural efficiencies by agreement. However, this is not always the case. In a court claim,
there are some court fees, but essentially the parties obtain the services of the court and the judge
for free. In arbitration, the parties need to pay the fees the tribunal plus administrative costs (e.g.
room hire) and these can be substantial. They will also need to deal with the practical
arrangements and organisation for any hearing.
3. Ongoing relationships- By design, the arbitration process tends to be less formal and more
collegial than traditional courtroom litigation, which tends to be more adversarial in nature. This
may not matter when litigants have no continuing relationship, but when there is an ongoing
business relationship that the parties may wish to preserve, arbitration may be more conducive to
success.

4. Confidentiality- One of the most compelling advantages of arbitration is the ability to keep
the dispute—and its resolution—under wraps. In arbitration, there is no public hearing and, thus,
no public record. The parties may agree as part of their pre-dispute arbitration clause that they
will maintain such disputes in confidence.

5. The law - In a courtroom, the judge is constrained by the law as it is reflected in statutes and
prior decisions, and the trial will be governed by the rules of evidence.

In contrast, arbitrators are not constrained by statutes or case law, nor are the proceedings before
them governed by the rules of evidence; instead, they have much greater flexibility to consider
whatever evidence they want (including evidence that would be excluded in a trial) and then
reach a decision that they perceive to be equitable, even if it is not precisely consistent with the
law.

6. Expertise- Parties can choose their arbitral tribunal. This allows them to choose arbitrators
with the relevant technical or other expertise for the dispute.

7. Appeal- The right to appeal the decision of the trial court is important. Although trial court
verdicts are not casually reversed, judges do make mistakes and the ability to request a “second
look” by an appellate panel is an important procedural safeguard. In arbitration, however, the
arbitrator’s decision generally is not subject to appeal.
8. Neutrality – in arbitration, the parties are able to refer their disputes to a neutral forum. This
is often attractive to commercial parties especially if they are wary of referring disputes to the
home courts of the other, as well as the seat of the arbitration, and the location of hearings are
neutral.

9. Delays – sometimes arbitration is a quicker way of resolving disputes than litigation. In truth,
significant delays can occur in arbitration, particularly in cases where one party deliberately
breaches procedural deadlines and seeks to delay proceedings.

10. Multiparty disputes – the right to arbitrate comes from the arbitration agreement. This
means that there is no power to join third parties unless all the parties, and the third party, agree.
Joining a party could save costs, however most parties will refuse agreement for tactical reasons.
This can result in a cumbersome and inconvenient procedure with a risk of inconsistent findings
and could prejudice settlement. Arbitration cannot easily accommodate class action litigation.

11. Summary determination – although an arbitral tribunal has the ability to determine claims
and defences summarily, in practice, they are often less willing than a court to do so. The courts
on the other hand can be quite forceful in disposing of meritless claims or defences at an early
stage in proceedings.

12. No precedent – arbitration awards are generally confidential to the parties. They do not give
rise to any binding precedent on other parties. In cases where a final and binding ruling on a
point of law and/or construction is required, litigation will always be the better option.
THE PURPOSE AND OBJECTIVES OF MODEL LAW 19854 AND ACT 789

The Model Law is designed to assist States in reforming and modernizing their laws on arbitral
procedure so as to take into account the particular features and needs of international commercial
arbitration. Thus its’ purpose is to harmonize national laws and arbitration.

It covers all stages of the arbitral process from the arbitration agreement, the composition and
jurisdiction of the arbitral tribunal and the extent of court intervention through to the recognition
and enforcement of the arbitral award. It reflects worldwide consensus on key aspects of
international arbitration practice having been accepted by States of all regions and the different
legal or economic systems of the world.

Amendments to articles 1 (2), 7, and 35 (2), a new chapter IV A to replace article 17 and a new
article 2 A were adopted by UNCITRAL on 7 July 2006. The revised version of article 7 is
intended to modernize the form requirement of an arbitration agreement to better conform with
international contract practices. The newly introduced chapter IV A establishes a more
comprehensive legal regime dealing with interim measures in support of arbitration. As of 2006,
the standard version of the Model Law is the amended version. The original 1985 text is also
reproduced in view of the many national enactments based on this original version.

ARBITRATION AGREEMENT BETWEEN PARTIES

4
UNCITRAL http://www.uncitral.org/uncitral/en/uncitral_texts/arbitration/1985Model_arbitration.html
The authority of arbitration tribunals rests on an agreement between the parties. This agreement
can take 2 forms. In the first form the parties submit to arbitration disputes that may arise in the
future and in the second form, parties submit an already existing dispute to arbitration. Here it is
difficult for the parties to agree about the site of arbitration and applicable law. Thus, it only
occurs when parties find a common interest in getting a quick solution.5

A widely-established requirement is that there has to be a written arbitration agreement. This

provision however can be interpreted flexibly for example the condition can be fulfilled by an
exchange of letters, telex etc. This is not merely a requirement that there be written evidence, but
the agreement itself must be in writing, each party have to declare in writing its consent to
arbitration. The UNCITRAL Model Law, article 7(2), determines that the exchange of statement of
claims is equivalent to a written agreement.6

In an international commercial arbitration, parties are free to designate the governing law for the
substance of the dispute. If the governing law is not specified, the arbitral tribunal shall apply the
rules of law it considers appropriate in view of the surrounding circumstances. Arbitration
enables the parties to a contract, to agree that if a dispute arises, a neutral and respected third
party or parties will be appointed to resolve their dispute in accordance with procedures that they
will have a large part in devising, in a desired venue, in accordance with a set of arbitration rules
they have chosen, with a particular set of laws to give the arbitration its legal basis (the lex
arbitri) and another set of laws in accordance to which the dispute will be resolved (lex causa). 7

Under arbitration agreement the UNCITRAL Model on International Commercial Arbitration

provides in Article 7 that;

5
Lewis, G. (2012). International Commercial Arbitration. Available at
https://www.scribd.com/doc/102472641/International-Commercial-Arbitration-Outline. [Accessed 24/05/2017]

6
Ibid
7
The law teacher (2017). International Commercial Arbitration. Available at //www.lawteacher.net/free-law-
essays/commercial-law/conflict-of-laws-in-international-commercial-arbitration-commercial-law-essay.php
[Accessed 25/05/2017]
7 (1) In this Act, 8"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.

(2) An arbitration agreement may be in the form of an arbitration clause in a contract or in the
form of a separate agreement.

(3) An arbitration agreement must be in writing.

(4) An arbitration agreement is in writing if it is contained in

(a) a document signed by the parties,

(b) an exchange of letters, telex, telegrams or other means of telecommunication which provide a
record of the agreement, or

(c) an exchange of statements of claim and defence in which the existence of an agreement is
alleged by one party and not denied by the other.

(5) The reference in a contract to a document containing an arbitration clause constitutes an

arbitration agreement if the contract is in writing and the reference is such as to make that
arbitration clause part of the contract.

In the case, of Robobar Limited (UK) limited v. Fincold SAS (Italy) 1993;9
Finncold supplied refrigerating units to Robobar for the manufacture of refrigerators for
European and US hotels. The purchase confirmations sent by Robobar contained a clause (in
Italian) stating the following: “any dispute arising out of this order shall be exclusively referred
to arbitration by a person to be appointed by the President of the Law Society.”1991: Robobar
suspended payment alleging that the units delivered by Finncold were defective and of a
poor quality. Upon answering client complaints, Robobar mentioned the faulty performance of
the Finncold units. Finncold initiated proceedings seeking payment of the purchase price plus
damages for loss of reputation. Robobar requested a preliminary ruling on jurisdiction by the

8
United Nations (1994). UNCITRAL MODEL LAW ON INTERNATIONAL COMMERCIAL ARBITRATION.
Available at www.uncitral.org/pdf/english/texts/arbitration/ml-arb/06-54671_Ebook.pdf [Accessed 24/05/2017]

9
Lewis, G. (2012). International Commercial Arbitration. Available at
https://www.scribd.com/doc/102472641/International-Commercial-Arbitration-Outline. [Accessed 24/05/2017]
Supreme Court which held that the Italian court had jurisdiction as the arbitration agreement was
not valid.
The main issue before the court was whether the clause satisfied the writing requirement. The
court held this was not satisfied. The reasoning here was that
Art. II of the NY Convention “recognizes as valid an arbitral clause for foreign arbitration
contained in a document signed by the parties or in an exchange of letters or telegrams. There is
no doubt that none of these formalities had been met in this case, since the clause is only
contained in Robobar’s confirmations, upon which Finncold does not seem to have agreed by
letter or by telegram. The court states “the agreement to arbitrate contained in an arbitral clause
in a contract is an independent agreement; its validity and efficacy must be ascertained
independently of the validity and efficacy of the contract.” Treating the formality of the
underlying contract as enough to satisfy the arbitration clause ignores the concept of separability.
You need to meet the independent formalities of each. The Brussels convention does not apply to
arbitration and the argument that the validity of the arbitral clause must be maintained on a good
faith basis after having performed under the contract in which that clause is contained equally
fails, since the formal requirement cannot be derogated.

Also, in the case of Compagnie de Navigation et Transports SA (France) v.

10
MediterraneanShipping Co. SA (Switzerland), Swiss Supreme Court [1995], the matter
concerned a maritime carriage contract. The general conditions (along with the arbitration clause
– article 2 of the general conditions) were printed on the back of the bill of lading. Upon
discovery of the fact that packages were missing and damaged, the French company filed a
request with its insurance company for indemnification. The insurance company commenced
proceedings against Med. Shipping Co. before the Court of First Instance of Geneva. Med.
Shipping objected that the State court lacked jurisdiction because of the arbitration clause in the
bill of lading. Court of First Instance found that it had jurisdiction. Court of Appeal reversed the
Court of First Instance’s decision. The Supreme Court affirmed the appellate decision, finding
that a valid arbitration clause had been concluded between the parties although the shipper had
not signed the bill of lading. Here the main issue was whether there was
a valid written arbitration agreement.
10
Lewis, G. (2012). International Commercial Arbitration. Available at
https://www.scribd.com/doc/102472641/International-Commercial-Arbitration-Outline. [Accessed 24/05/2017]
There was a bill of lading so that counts for one party. But the carrier hadnot signed it so
technically it does not satisfy the requirements of Art. II. Nonetheless, the court held that because
the parties were experienced traders and had prior interactions, the arbitration agreement was
valid. The parties, for several years, always made use of the general conditions as printed on
the back of the bill of lading. Even though there wasn’t a formal written agreement, there was
enough additional evidence to conclude that both parties were aware of the agreement and agreed
to it.

In certain instances, battle of forms has been held to create arbitration agreement. In the case of
I.T.A.D. Associates, Inc. v. Podar Brothers, 11there was a Contract between the NY company
and the Bombay Company. Both companies provided for arbitration but the NY company
wanted an arbitration in the case of a disagreement for the arbitration in NY and Bombay
Company’s case for arbitration in Bombay. A dispute arose and NY company sued in US courts.
The main issue whether was there a valid arbitration clause. The court held there was
an arbitration agreement.The court was of the view that there was no doubt both parties wanted
an arbitration the only sticking issue was the location which did not affect the basic intent of both
parties.

Furthermore, since litigation is the presumed method of settling disputes, it is essential for the
agreement to determine what issues are going to be submitted to arbitration. It is important to
avoid splitting related claims between arbitration and litigation. The scope can be problematic
when the parties renew the contract. In the case of Tennessee v. PP Filippo and Prix Italia, US
District Court, Tennessee, 1990, Prix appointed Tennessee its exclusive distributor for the US,
Canada and Mexico. Prix notified to terminate the contract, but Tennessee wants two
more years. Tennessee suit Prix for breach of contract and for false and
intentionally incorrect statements.
The court held that the parties had an arbitration agreement by which the Arbitration Court of the
Chamber of Commerce in Venice Italy would resolve disputes. On the issue of dismissal of the
action, the District court was of the view that, the language of the arbitration clause was very

11
Lewis, G. (2012). International Commercial Arbitration. Available at
https://www.scribd.com/doc/102472641/International-Commercial-Arbitration-Outline. [Accessed 24/05/2017]
broad; thus, all claims were inside its scope, even the contract-based tort claim. Tennessee failed
to demonstrate that it would be inconvenienced and prejudiced so significantly as to overcome a
valid arbitration clause. The contract was negotiated at arm’s length, the arbitration clause was
the price paid by Tennessee to become Prix’s exclusive distributor. Also, the clause was not
hidden. Since the clause was valid, operative and capable of  being performed,
the parties were referred to arbitration, with the exception of PP Filippi, because he wasn’t a
party to the agreement. Nevertheless, his action was determined to wait the result of the
arbitration.

Another issue under arbitration agreement is that under certain conditions a party to an
arbitration may be deemed to have waived its right to arbitration whether impliedly or by
conduct. In the case of Menorah v. Inx Reinsurance, US Court of Appeals, First Circuit, 1995
12
Menorah and Inx had seven reinsurance contracts, according to which the disputes would be
arbitrated in Tel Aviv and would be settled by equity. Menorah made a claim to Inx that
the latter did not accept. Menorah tried to seek arbitration but Inx responded that it would not
arbitrate. Menorah filed a suit against Inx, who chose not to respond or contest. Menorah filed an
exequatur action in the Superior Court in San Juan to enforce the Tel Aviv judgment. Only
during exequatur, Inx moved to dismiss the claim affirming that the parties had an arbitration
agreement. Inx removed the action to US federal court, which found that Inx had
waived arbitration. The main issue was whether a party can waive arbitration or not. The court
was of the view that, the explicit waiver came when Inx was invited to arbitrate and expressly
declined it. The implicit waiver came from Inx’s entire course of conduct, since after three years
of proceeding there was no attempt to go to arbitration. To require the parties to arbitrate, despite
their advance in court, would be unfair, and would also give Inx a second chance in another
forum. Menorah suffered prejudice from the incurred expenses as a direct result of Inx’s dilatory
behavior. Most important of all, arbitration clauses were not meant to be another weapon for
imposing delay and costs. Test to determine when a party waives its right to arbitrate: (1) party
was aware of its right to arbitration; (2) acted in a manner inconsistent with the exercise of that
right; (3) prejudiced the opposing party as a result.

12
Lewis, G. (2012). International Commercial Arbitration. Available at
https://www.scribd.com/doc/102472641/International-Commercial-Arbitration-Outline. [Accessed 24/05/2017]
APPONITMENT OF AN ARBITRAL TRIBUNAL

The choice of where an arbitration is venue, known as the seat or the place of arbitration, has
important implications and should not be made lightly. The venue of an arbitration impacts the
role of local courts in relation to the arbitration, the conduct of the arbitration, and ultimately the
enforceability of the award. Careful selection of the venue of an arbitration is important for
several reasons. First, state courts of the selected venue have a role in supervising the arbitration
and can influence the process not only before the proceedings have been initiated, but also during
the arbitral hearing. The parties, therefore, should pay attention to the local laws and general
judicial attitude towards arbitration in the chosen jurisdiction. Secondly, the seat of arbitration
may lead to the imposition of specific rules regarding the conduct of the arbitration, whether
relating to the treatment of witnesses or even who may act as counsel or arbitrator. Thirdly, the
local laws of the seat of arbitration will be important for the enforcement of the ultimate award
or for the applications seeking to annul it. The choice of venue impacts many other issues,
including some that may significantly affect cost and convenience. For example, the venue is
frequently (although not always) the location where the hearings are held. Thus, it is important to
ensure parties and their witnesses have easy physical and legal access to the area.13

In the vast majority of cases, the arbitral tribunal consists of either one or three arbitrators. The
choice between one or three arbitrators can be made in advance or left for agreement between the
parties (or for decision by an arbitral institution or appointing authority) after the dispute has
arisen. Arbitration with a sole arbitrator is generally cheaper than using three arbitrators, both
because of the savings in arbitrators’ fees and because he or she can conduct the proceedings
more quickly, without the need to coordinate with two other busy professionals. However,
providing for a sole arbitrator means that the parties cannot each select or nominate an arbitrator
and, of course, the proceedings revolve around just one decision-maker. In addition, the
exchanges and interplay among the arbitrators in a three-member panel can sometimes give more
13
Latham & Watkins (2014). Guide to International Arbitration. Available at www.lw.com/thoughtleadership/guide-
to-international-arbitration-2014 [Accessed 24/05/2017]
insight into the tribunal’s decision-making process, allowing a party to alter its strategy
accordingly. For these reasons, high-value and complex international disputes are generally
referred to three arbitrators.14

The major arbitration rules (and many national laws) provide methods for the appointment of the
tribunal in default of agreement between the parties. In general, sole arbitrators are selected by
agreement between the parties or, if no agreement is reached within the allotted time, by the
chosen appointing authority (or, if none, the relevant court). Where three arbitrators are to be
appointed, two of them are normally selected by the parties, with the Chairman or President
being chosen either by the two party-selected arbitrators or by the appointing authority (or court).
The parties can require that the arbitrators (or the Chairman) possess specified qualities (e.g.,
persons in practice for at least 10 years or of different nationalities from the parties or with
experience in international financial transactions). The arbitrators need not be lawyers but, for
high value international disputes, they normally are. Parties usually seek advice from their
lawyers as to suitable arbitrators. 15

Article 10 and 11 of the UNCITRAL 16Model on International Commercial Arbitration Act in

this regard provides that;

10 (1) The parties are free to determine the number of arbitrators.

(2) Failing the determination referred to in subsection (1), the number of arbitrators is 3.

11 (1) A person of any nationality may be an arbitrator.

14
Latham & Watkins (2014). Guide to International Arbitration. Available at www.lw.com/thoughtleadership/guide-
to-international-arbitration-2014 [Accessed 24/05/2017]

15
IBID
16
United Nations (1994). UNCITRAL MODEL LAW ON INTERNATIONAL COMMERCIAL ARBITRATION.
Available at www.uncitral.org/pdf/english/texts/arbitration/ml-arb/06-54671_Ebook.pdf [Accessed 24/05/2017]
(2) Subject to subsections (6) and (7), the parties are free to agree on a procedure for appointing
the arbitral tribunal.

(3) Failing any agreement referred to in subsection (2), in an arbitration with 3 arbitrators, each
party must appoint one arbitrator, and the 2 appointed arbitrators must appoint the third
arbitrator.

(4) If the appointment procedure in subsection (3) applies and

(a) a party fails to appoint an arbitrator within 30 days after receipt of a request to do so from the
other party, or

(b) the 2 appointed arbitrators fail to agree on the third arbitrator within 30 days after their
appointment, the appointment must be made, on request of a party, by the Chief Justice.

(5) Failing any agreement referred to in subsection (2), in an arbitration with a sole arbitrator, if
the parties fail to agree on the arbitrator, the appointment must be made, on request of a party, by
the Chief Justice.

(6) If, under an appointment procedure agreed on by the parties,

(a) a party fails to act as required under that procedure,

(b) the parties, or 2 appointed arbitrators, fail to reach an agreement expected of them under that
procedure, or

(c) a third party, including an institution, fails to perform any function entrusted to the third party
under that procedure, a party may request the Chief Justice to take the necessary measure, unless
the agreement on the appointment procedure provides other means for securing the appointment.

(7) A decision on a matter entrusted by subsection (4), (5) or (6) to the Chief Justice is final and
is not subject to appeal.

(8) The Chief Justice, in appointing an arbitrator, must have due regard to

(a) any qualifications required of the arbitrator by the agreement of the parties, and

(b) other considerations as are likely to secure the appointment of an independent and impartial
arbitrator.
(9) Unless the parties have previously agreed to the appointment of a sole or third arbitrator who
is of the same nationality as any of the parties, the Chief Justice must not appoint a sole or third
arbitrator who is of the same nationality as that of any of the parties.

PROCEDURAL CONFERENCE

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. Failing such agreement, the
arbitral tribunal may, subject to the provisions of this Law, conduct the arbitration in such
manner as it considers appropriate. The power conferred upon the arbitral tribunal includes the
power to determine the admissibility, relevance, materiality and weight of any evidence.
The parties are free to agree on the language or languages to be used in the arbitral proceedings.
Failing such agreement, the arbitral tribunal shall determine the language or languages to be used
in the proceedings. This agreement or determination, unless otherwise specified therein, shall
apply to any written statement by a party, any hearing and any award, decision or other
communication by the arbitral tribunal. The arbitral tribunal may order that any documentary
evidence shall be accompanied by a translation into the language or languages agreed upon by
the parties or determined by the arbitral tribunal.
Within the period of time agreed by the parties or determined by the arbitral tribunal, the
claimant shall state the facts supporting his claim, the points at issue and the relief or remedy
sought, and the respondent shall state
his defence in respect of these particulars, unless the parties have otherwise agreed as to the
required elements of such statements. The parties may submit with their statements all
documents they consider to be relevant or may add a reference to the documents or other
evidence they will submit. Unless otherwise agreed by the parties, either party may amend or
supplement his claim or defence during the course of the arbitral proceedings, unless the arbitral
tribunal considers it inappropriate to allow such amendment having regard to the delay in making
it.
Subject to any contrary agreement by the parties, the arbitral tribunal shall decide whether to
hold oral hearings for the presentation of evidence or for oral argument, or whether the
proceedings shall be conducted on the basis of documents and other materials. However, unless
the parties have agreed that no hearings shall be held, the arbitral tribunal shall hold such
hearings at an appropriate stage of the proceedings, if so requested by a
party. The parties shall be given sufficient advance notice of any hearing and
of any meeting of the arbitral tribunal for the purposes of inspection of goods, other property or
documents. All statements, documents or other information supplied to the arbitral tribunal by
one party shall be communicated to the other party. Also, any expert report or evidentiary
document on which the arbitral tribunal may rely in making its decision shall be communicated
to the parties.

Unless otherwise agreed by the parties, if, without showing sufficient cause, the claimant fails to
communicate his statement of claim in accordance with article 23(1), the arbitral tribunal shall
terminate the proceedings; the respondent fails to communicate his statement of defence in
accordance with article 23( 1), the arbitral tribunal shall continue the proceedings without
treating such failure in itself as an admission of the claimant's
allegations; any party fails to appear at a hearing or to produce documentary evidence, the
arbitral tribunal may continue the proceedings and make the award on the evidence before it.

ARBITRATOR’S JURISDICTION AND POWERS

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. Failing such agreement, the
arbitral tribunal may, subject to the provisions of this Law, conduct the arbitration in such
manner as it considers appropriate. The power conferred upon the arbitral tribunal includes the
power to determine the admissibility, relevance, materiality and weight of any evidence.
The parties are free to agree on the language or languages to be used in the arbitral proceedings.
Failing such agreement, the arbitral tribunal shall determine the language or languages to be used
in the proceedings. This agreement or determination, unless otherwise specified therein, shall
apply to any written statement by a party, any hearing and any award, decision or other
communication by the arbitral tribunal. The arbitral tribunal may order that any documentary
evidence shall be accompanied by a translation into the language or languages agreed upon by
the parties or determined by the arbitral tribunal.
Within the period of time agreed by the parties or determined by the arbitral tribunal, the
claimant shall state the facts supporting his claim, the points at issue and the relief or remedy
sought, and the respondent shall state
his defence in respect of these particulars, unless the parties have otherwise agreed as to the
required elements of such statements. The parties may submit with their statements all
documents they consider to be relevant or may add a reference to the documents or other
evidence they will submit. Unless otherwise agreed by the parties, either party may amend or
supplement his claim or defence during the course of the arbitral proceedings, unless the arbitral
tribunal considers it inappropriate to allow such amendment having regard to the delay in making
it.
Subject to any contrary agreement by the parties, the arbitral tribunal shall decide whether to
hold oral hearings for the presentation of evidence or for oral argument, or whether the
proceedings shall be conducted on the basis of documents and other materials. However, unless
the parties have agreed that no hearings shall be held, the arbitral tribunal shall hold such
hearings at an appropriate stage of the proceedings, if so requested by a
party. The parties shall be given sufficient advance notice of any hearing and
of any meeting of the arbitral tribunal for the purposes of inspection of goods, other property or
documents. All statements, documents or other information supplied to the arbitral tribunal by
one party shall be communicated to the other party. Also any expert report or evidentiary
document on which the arbitral tribunal may rely in making its decision shall be communicated
to the parties.

Unless otherwise agreed by the parties, if, without showing sufficient cause, the claimant fails to
communicate his statement of claim in accordance with article 23(1), the arbitral tribunal shall
terminate the proceedings; the respondent fails to communicate his statement of defence in
accordance with article 23( 1), the arbitral tribunal shall continue the proceedings without
treating such failure in itself as an admission of the claimant's
allegations; any party fails to appear at a hearing or to produce documentary evidence, the
arbitral tribunal may continue the proceedings and make the award on the evidence before it.

AWARD AND ROLE OF STATE COURTS

Award in an international commercial arbitration is the decision of an arbitral tribunal on a
substantive issue (as distinct from a merely procedural order or direction). Awards are often
referred to as “interim”, “partial” and/or “final” awards. Interim awards have only temporary
effect and do not finally decide an issue (which can, accordingly, be revisited by the tribunal at a
later stage of the arbitration). A partial award finally decides one or more (but not all) of the
issues before the tribunal. A final award decides all the (or all the remaining) issues and (subject
to any corrections) essentially ends the arbitration. An arbitral award must be made in writing
and must be signed by the members of the arbitral tribunal. In arbitral proceedings with more
than one arbitrator, the signatures of the majority of all the members of the arbitral tribunal are
sufficient if the reason for any omitted signature is stated. The arbitral award must state the
reasons on which it is based, unless the parties have agreed that no reasons are to be given. The
arbitral award must state its date and the place of arbitration as determined and the award is
deemed to have been made at that place. After the arbitral award is made, a signed copy must be
delivered to each party.17

In terms of interests and costs, unless otherwise agreed between the parties, the arbitral tribunal
will determine these matters.
Arbitrators’ duty to render an enforceable award is referred to in arbitral awards, national laws,
institutional rules, ethical codes and scholarly writing. Its relevance is well known and under the
New York Convention an award need not be enforced if it violates the public policy of the forum
where enforcement is sought or has been set aside by courts of the seat. Thus, any mandatory
rule that reflects either of the two fora’s public policy should give rise to enforceability concerns.
While faith in the arbitration system and desire to avoid the publicity related to enforcement
proceedings may often lead parties to comply voluntarily with awards, this cannot be relied
upon, for when enforcement proceedings arise and fail, the costs for the parties, the arbitrators,
the institutions, the states and the system as a whole are enormous.

17
United Nations (1994). UNCITRAL MODEL LAW ON INTERNATIONAL COMMERCIAL ARBITRATION.
Available at www.uncitral.org/pdf/english/texts/arbitration/ml-arb/06-54671_Ebook.pdf [Accessed 24/05/2017]
Ghana is a party to the New York Convention on the Recognition and Enforcement of Foreign
Arbitral Awards, concluded in 1958 (the New York Convention) and which provides a regime
for the enforcement and recognition of arbitral awards within contracting states. In Ghana,
pursuant to Section 59 of the Act, the High Court of Ghana will enforce an arbitral award made
under the New York Convention and not subject to a pending appeal.
A point to note is that Section 59(3) of the Act, in setting out the circumstances in which
enforcement of a foreign award will be refused, does not include an exemption on grounds of
public policy. However, this exemption exists under the provisions of the New York Convention
and so it is worth bearing in mind that this ground may also be relied on to resist enforcement of
a foreign award. The party that wishes to enforce the award must produce the original award or
an authenticated copy, as well as the agreement pursuant to which the award was made.

However, in Ghana when contracting with the Government, an investor should take note of
Article 181(5) of the Ghanaian Constitution. This Article imposes the requirement for
parliamentary approval of an "international business or economic transaction to which the
Government is a party". This covers agreements entered into between the Ghanaian government
and international investors, whether directly or indirectly through a Ghanaian incorporated
subsidiary. Failure to comply with Article 181(5) will render the agreement void.
There is ongoing debate (some of the debate has been before the Ghanaian Supreme Court) as to
the nature and/or manner of transactions that will fall within the scope of Article 181(5). It has
been suggested by the Supreme Court that transactions of "ordinary commerce" or those that are
not "major" do not fall within the scope of Article 181(5). Proposals to clarify the scope of
Article 181(5) have been put before Parliament and pending such clarification, investors should
certainly consider seeking parliamentary approval for transactions with the government.
Whether or not an agreement with the government complies with Article 181(5) of the
Constitution will of course have an impact on the arbitrability of any disputes arising thereunder.
In order words, where an agreement is held to be void by the Ghanaian Courts for failing to
comply with Article 181(5) and the investor has referred the dispute to international arbitration
(in accordance with the terms of the agreement), such an investor (if successful in the
international arbitration) is likely to face difficulties with the recognition and enforcement of its
award in Ghana.
Thus, in the case of the Attorney General v (1) Balkan Energy Ghana Ltd (2) Balkan Energy
LLC and (3) Mr Philip David Elders [2012] 18this provision of Article 181 (5) was an issue
that was raised at the Permanent Court of Arbitration at the Hague. The dispute led to the first
defendant initiating, by a Notice of Arbitration dated 23rd December 2010, arbitration
proceedings against the Government of Ghana under the auspices of the Permanent Court of
Arbitration at the Hague, the Netherlands.  At these proceedings, the Ghana Government raised
the point that a Power Purchase Agreement (PPA) between the state of Ghana and the defendants
needed Parliamentary approval under article 181(5) of the 1992 Constitution, but that this
approval had not been sought and therefore the PPA was invalid, as having been executed in
breach of a constitutional provision.  The Government of Ghana argued before the arbitration
tribunal that non-compliance with the constitutional provision made the PPA invalid, including
its arbitration clause, and consequently the arbitral tribunal had no jurisdiction over the dispute
before it.  However, the arbitral tribunal held that it had jurisdiction, but expressed a willingness
to take account of this Court’s interpretation of the constitutional provision in question

18
Attorney General v (1) Balkan Energy Ghana Ltd (2) Balkan Energy LLC and (3) Mr Philip David Elders (2012)
Unreported REFERENCE No. J6/1/201216TH MAY,2012