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Overview: Arbitration under the UN Commission on International Trade Law

Published on : 14 Jul 2019

Arbitration Law under the United Nations Commission on International Trade Law

Established on 17 December 1966, The United Nations Commission on International Trade Law (UNCITRAL) was founded in response to the realization that the trans-global community is acutely economically connected. Understanding this assembly, UNCITRAL was enacted to govern bodies participating in international trade and investment. UNCITRAL's parent organization, the United Nations General Assembly, developed the legal framework "in pursuance of its mandate to further the progressive harmonization and modernization of the law of international trade by preparing and promoting the use and adoption of legislative and non-legislative instruments in a number of key areas of law."Involving multiple tiers of domestic and international legislative enforcement, UNCITRAL represents the focal point of United Nations international trade law. UNCITRAL legitimizes its mandate through encouraging cooperation amongst Member States, promoting the growth of international participation, modernizing and adopting international conventions benefitting trade, ensuring clear and uniform interpretation by signatories, cultivating unity with other branches of the UN, and interceding when necessary to execute its functions. As of 2004, 60 states, representing both developing and developed economies, held membership in UNCITRAL. Expressed in the Preamble of the General Assembly Resolution 2205 (XXI), the establishment of UNCITRAL is predominantly founded on the belief “that the interests of all peoples, and particularly those of developing countries, demand the betterment of conditions favouring the extensive development of international trade.” Through the enactment of the Commission, legal barriers hindering the progress of international trade, are circumvented. Legislatively, UNCITRAL addresses several matters related to trade, including (but not limited to): international sale of goods, international payments, electronic commerce, international transport of products, and international dispute resolution (including arbitration).

International Commercial Arbitration and UNCITRAL

Seeking to both modernize and fuse international trade laws, three categories of techniques have been adopted by UNCITRAL. These systems include: legislative procedures, contractual texts, and explanatory doctrine. Under UNCITRAL, numerous legislative documents govern international commercial arbitration. For the purpose of this article, discussion of UNCITRAL arbitration regulations will be narrowed to: the Convention of International Settlement Agreements Resulting from Mediation, UNCITRAL Arbitration Rules, and the UNCITRAL Model Law on International Commercial Arbitration.

  • United Nations Convention on International Settlement Agreements Resulting from Mediation (not yet in force)

Disclosed in the draft’s Preamble, UNCITRAL Member Parties recognize that arbitration holds prospective amicable value in settling commercial disputes arising from international trade. Also outlined in the Preamble is the Convention’s intended purpose. Parties to the Convention hope to establish a “…framework for international settlement agreements resulting from mediation that is acceptable to States with different legal, social and economic systems [which would] contribute to the development of harmonious international economic relations.”

Article 1 of the drafted Convention explains the “Scope of Application” for international settlement agreements resulting from mediation. A settled agreement is considered international (and therefore governable by the Convention) if at minimum, two parties involved in the settlement operate their places of business in different states (Article 1(1)). Should either party have their businesses within the same state, the scope can still be considered international under Article 1(1(b)) if the state which houses the businesses is different than the state “in which a substantial part of the obligations under the settlement agreement is performed; or…The State with which the subject matter of the settlement agreement is most closely connected.” Article 1(2) also defines various types of settlement agreements that are nonapplicable under the Convention. Concisely, any settlement agreement involving a consumer transaction dispute, inheritance or employment law, or previous court proceeding, does not apply to the Convention.

Should a party wish to use the Convention to seek relief, Article 4(1) requires that party to provide: 1) A settlement agreement signed by each party, and 2) Proof the agreement resulted from mediation technique. The Convention requires all relief requests be handled “expeditiously” by an authority of the Party to the Convention (Article 4(5)).

Just as an authority of the Party to the Convention can grant relief, they are also able to refuse assistance. Relief can be denied (Article 5) if the non-relief seeking party can prove: party incapacity occurred during settlement agreement, the settlement is void or impracticable in relation to the law subjected, the arrangement is not binding, settlement obligations are unclear, or “granting relief would be contrary to the public policy of that [State] Party.”

Notably, the Convention stresses in Article 7 “Other laws or treaties” that the Convention will not revoke a relief seeking party its right to obtain a settlement agreement in a method permitted by “the law or the treaties of the Party to the Convention where such settlement agreement is sought to be relied on.”

  • UNCITRAL Arbitration Rules

The UNCITRAL Arbitration Rules (1976) offer member parties a detailed selection of procedural rules outlining the conduct of commercial arbitral proceedings. Beyond guiding all stages of and roles involved with the arbitral process, the Arbitration Rules also include a model arbitration clause. The text can be utilized to resolve a variety of disputes such as those occurring between private commercial parties, an investor and a State, and between two States. Since 1976, the UNCITRAL Arbitration Rules have been revised three times, resulting in an enhancement of efficiency and innovation. The 2010 revision included Rules on Transparency in investor-State arbitration.

  • UNCITRAL Model Law on International Commercial Arbitration

Adopted in 1985, the UNCITRAL Model Law on International Commercial Arbitration is fashioned as a recommendatory document encouraging Member States to consider “the desirability of uniformity of the law of arbitral procedures and the specific needs of international commercial arbitration practice” (Preamble).  The Model Law was initially designed to address previously perceived incongruities existing within national laws on arbitration. Although the Model Law is a prescriptive document, numerous states have structured their national arbitration laws based on the protocols. The UAE’s recently issued Federal Law No. 6 of 2018 (the Arbitration Law) is broadly designed around the Model Law.

Chapter 1: General Provisions

The Model Law, according to Article 1, applies to international commercial arbitration amongst Member States. Due to the fact the Law is intended to govern multiple states, Article 2 (A) clarifies the need for interpretive regard to the Law’s “…international origin and to the need to promote uniformity in its application and the observance of good faith.” Under the Law (unless specified within the provisions), courts are not permitted to intervene in governed matters.

Chapter Two: Arbitration Agreement

Distinguished in Article 7(1), an “‘Arbitration agreement’ is 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….” The Law requires courts presiding over cases subject to an arbitration agreement to refer parties to arbitration. However, Article 9 permits parties of an arbitration agreement to request “…from a court an interim measure of protection and for a court to grant such measure.”

Chapter Three: Composition of Arbitral Tribunals

The prescribed composition of an arbitral tribunal is outlined in chapter three of the Law. While parties can select how many arbitrators they choose to have present, arbitrators “…shall disclose any circumstances likely to give rise to justifiable doubts as to his impartiality or independence” (Article 12). If justifiable doubt develops, an arbitrator may be challenged. The challenge procedure is established in Article 13. Granted freedom to choose the method through which the party intends to challenge the arbitrator, a party must send a statement (describing their grounds to challenge) within 15 days of becoming aware of the justifiable doubts.

Chapter Four: Jurisdiction of Arbitral Tribunal

The Law permits a tribunal to operate within their own jurisdiction, however, should a plea be raised questioning a tribunal’s scope of authority, that plea cannot be issued later than the statement of defence’s submission (Article 16).  

Chapter Five: Interim Measures

Article 17 endows arbitral tribunals the power to grant interim measures per party request. According to this section (Article 17(2)), a temporary rule can be issued to order a party to: “(a) Maintain or restore the status quo pending determination of the dispute; (b) Take action that would prevent, or refrain from taking action that is likely to cause, current or imminent harm or prejudice to the arbitral process itself; (c) Provide a means of preserving assets out of which a subsequent award may be satisfied; or (d) Preserve evidence that may be relevant and material to the resolution of the dispute.” Through Article 17 D., a tribunal is also capable of modifying, suspending, or terminating granted interim measures.

Chapter Six: Conduct of Arbitral Proceedings

The Law (Article 18) requires all parties to be equitably treated and allowed “full opportunity.” Parties, upon agreement, are permitted to select their arbitration location and preferred language used during the proceeding. During the proceeding, according to Article 23(1), “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….” In the case of contrary agreements (Article 24(1)), an arbitral tribunal can choose to hold an oral hearing to present evidence, “on whether the proceeding shall be conducted on the basis of documents and other materials.”

Chapter Seven: Making of Award and Termination of Proceedings

Under Article 28, disputes are decided through applying the appropriate rule of law selected by the parties. The designation “…of the law or legal system of a given State shall be construed…as directly referring to the substantive law of that State and not to its conflict of laws rules” (Article 28(1)). Decisions must abide by the terms of the contract and consider trade applicability to the transaction.

Chapter Nine: Recognition and Enforcement of Awards

Regardless of the country in which the arbitral award was decided, the award is considered binding. Enforcement of an award can be refused under certain conditions (Article 36(1)), which include: during the agreement a party was under incapacity, a party was not granted proper notice of the appointment, the award does not fall within arbitration’s jurisdiction, or the award is not yet binding.


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