The global ramp-up of international arbitration institutions in the last three decades suggests a break in the monopoly of international arbitration centres in North America and Europe.

Mon, 10/01/2018 - 14:46 By admin
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Until twenty years ago very few legal systems globally possessed the necessary legislation to cater to international arbitration. Therefore, it was only practiced in certain quarters. Most legal systems, both civil and common law, only provided for adversarial-type litigation for the resolution of commercial disputes. International arbitration was only available in the metropolitan hubs of North America and Western Europe, where the thriving business environment, and the trans-boundary nature of many transactions, demanded such a dispute settlement mechanism. In North America, the American Arbitration Association’s (AAA) who had been administering dispute resolution since 1926, established the International Centre for Dispute Resolution (ICDR) in 1996 as a distinct body for international commercial arbitration. In Europe, most international arbitrations were split between the Permanent Court of Arbitration (PCA) in The Hague, the International Chamber of Commerce (ICC) in Paris and the London Court of Arbitration (LCIA) in London. Sweden’s Stockholm Chamber of commerce was another key European institution involved in the resolution of international commercial disputes.

However, over the last two decades, states have come to appreciate the benefits associated with providing parties with a viable alternative to litigation and many have begun instituting the necessary infrastructure to provide their business communities with access to international arbitration. While it started relatively slowly, this phenomenon is now gathering much impetus across the globe and options to arbitrate closer to home have started to surface.

A growing number of countries have recognized the need for and established themselves as venues for the conduct of international arbitration. Whereas many countries previously lacked the infrastructure to offer international arbitration, today, we are witnessing a rapid increase in the number of countries that are equipped to become international arbitration hubs. This is particularly true of the developing economies which are beginning to attract significant levels of commerce. We will now review developments in specific regions.

II. The growth of arbitral institutions globally

1. Africa

African countries, for numerous reasons and with various degrees of intensity, historically, articulated their reservations with regards to arbitration. This is aptly illustrated in the antiquated nature of most African arbitration laws until the 1990s. In 1992, arbitration laws in Kenya (Cap. 49), Malawi (Cap. 6:03), Uganda (Cap. 55), Zambia (Cap. 180) and Mauritius (Cap. 164), were all modelled after the English Arbitration Acts (1854) or (1889). In 1992, only Swaziland had a modern national arbitration law modelled after the English Arbitration Act (1979). By 2006, only seven African States had promulgated domestic laws based on the 1985 UNCITRAL Model Law. These were Nigeria (1990) Egypt (1994), Kenya (1995), Zimbabwe (1996), Madagascar (1998), Uganda (2000) and Zambia (2000). Since then, Mauritius (2008) and Rwanda (2008) have enacted legislation based on the UNCITRAL Model Law. Nevertheless, recognizing the importance of this dispute settlement mechanism in countries that are heavily dependent on foreign investment of which the preeminent dispute settlement mechanism is international arbitration, African countries such as Egypt, Kenya, Nigeria, South Africa and Rwanda are aiming to become part of the global international arbitration conversation by establishing international arbitration centres. Even Mauritius, whose Arbitration legislation, prior to adopting its new arbitration legislation based on the UNCITRAL Model Law in 2008, was modelled after a 19th Century English Legislation, has sought to enhance its attractiveness as a sophisticated international arbitration jurisdiction. In 2010, Mauritius established the Mauritius International Arbitration Centre (MIAC) in partnership with the LCIA.

2. Australasia

Australia established the Australian Centre for International Commercial Arbitration (ACICA) in 1985 andNew Zealand, too, has sought to establish itself as an international arbitration jurisdiction. With the advent of globalization, the intensification of cross-border transactions in the 1980s and 1990s and the demand for this dispute settlement mechanism, Hong Kong established the Hong Kong International Arbitration Centre (HKIAC) in 1985 and Singapore established the Singapore International Arbitration Centre (SIAC) in 1991. Both these institutions have now established themselves as major centres for the resolution of international commercial disputes in Asia. China’s International Economic and Trade Arbitration Commission (CIETAC) has also become an important arbitration institution. Formerly known as the Foreign Trade Arbitration Commission, CIETAC was set up in April 1956 under the China Council for the Promotion of International Trade (CCPIT) in accordance with the Decision Concerning the Establishment of A Foreign Trade Arbitration Commission Within the China Council For the Promotion of International Trade adopted on May 6, 1954, at the 215th session of the Government Administration Council. Since 2000, CIETAC is also known as the Arbitration Court of the China Chamber of International Commerce (CCOIC). Various Chinese cities have built on this, in particular, the Shanghai International Economy and Trade Arbitration Commission (also known as the Shanghai International Arbitration Center; previously known as the China International Economic and Trade Arbitration Commission Shanghai Commission) was established through a formal procedure and legitimately registered, and has been acting as an independent arbitration institute ever since.

3. The Middle East

Notwithstanding early scepticism towards international arbitration in countries such as Saudi Arabia and Abu Dhabi, the Middle East has also seen an influx of international arbitration centres in the last few years. Abu Dhabi, Bahrain and Dubai have all established arbitral institutions. Based on the tireless endeavours of the Abu Dhabi Chamber of Commerce and Industry (ADCCI) to provide every possible facility to its members in order to improve and stabilize their businesses, ADCCI established the Abu Dhabi Commercial Conciliation and Arbitration Centre (ADCCAC) in 1993. It was the first centre in the Gulf Cooperation Council (GCC) to administer national and international commercial disputes. In Bahrain, the result of a partnership between the AAA and Bahrain’s Ministry of Justice and Islamic Affairs, the Bahrain Chamber of Dispute Resolution (BCDR) provides a formal system of ADR services. The centre’s role is entrenched in recently enacted legislation that made Bahrain the first country to offer what is being called a “free arbitration zone” and the first to introduce the concept of statutory arbitration for commercial and financial disputes. Bahrain’s unique ADR law establishes the Persian Gulf island nation as a neutral venue for multinational companies who choose to resolve their disputes through international arbitration. As a free arbitration zone, Bahrain offers jurisdictional and legal certainty to the recognition of arbitration awards. Created in 1994 as the “Centre for Commercial Conciliation and Arbitration”, the current Dubai International Arbitration Centre (DIAC) is an autonomous, permanent, non-profit institution. Located in the Dubai Chamber of Commerce & Industry (DCCI), the Centre provides arbitration services for the regional and international business communities.

4. Latin America and the Caribbean

Latin American countries have generally shied away from international arbitration. For this reason, international arbitration is not as sophisticated and widely accepted in Latin America as it is in other regions. Brazil is a trailblazer in South America and has sought to establish itself as the venue of choice for international arbitration early on. In 1979, the Chamber of Commerce Brazil-Canada created the first Brazilian Arbitration Institution. Since then, the Centre for Arbitration and Mediation of the Chamber of Commerce Brazil-Canada (CAM-CCBC) transformed pioneering spirit into leadership, becoming the most popular arbitration institution in Brazil. In 2012, the CAM-CCBC new Arbitration Rules came into force, creating a simple, notwithstanding solid, base for faster and efficient dispute resolution. This revision includes well-grounded solutions for the growing complexity of the arbitration proceedings. Until March 2016, CAM-CBBC had administered over 6.5 billion American dollars in disputes, and approximately 660 arbitration proceedings, a tribute to their establishment as the premier venue in South America. 

In the last decade, the Caribbean, too, has seen the intensification of the promotion of international arbitration in this region. This has seen jurisdictions in the region begin to enhance their legal systems to accommodate the growing need for an international arbitration centre to service the region’s needs. Jurisdictions such as Bahamas, Barbados, Bermuda, British Virgin Islands, Dominican Republic, Jamaica and Trinidad and Tobago are all in the process of establishing the legal infrastructure that would enable them to capitalize on the increasing demand for a major international arbitration institution in this part of the world. So far, the BVI who established the BVI International Arbitration Centre (BVI IAC) in 2016 and Jamaica who established the Mona International Centre for Arbitration and Mediation (MICAM) in 2016 is on track to become the region’s two most sought-after institutions for international arbitration. In particular, the BVI has enacted an Arbitration Act based on UNCITRAL model law and is now a party to the New York Convention. Jamaica also has a brand new 2017 Arbitration Act based on the UNCITRAL Model law and is also a party to the New York Convention.

III. Conclusion

The internationalisation of Arbitration is essential to enhancing the legitimacy and promoting the efficacy of this dispute settlement mechanism, which has seen its fair share of criticism. It is also essential in providing the international business community with more options to choose from in the resolution of disputes, especially those arising from transboundary disputes. This is particularly important in relation to the Caribbean, an eclectic multi-legal jurisdiction region, which until recently did not offer much in terms of commercial dispute resolution options apart from traditional litigation. The BVI and Jamaica are currently on track to become leading international arbitration hubs in this region with their establishment of international arbitration centres. This global ramp-up of international arbitration institutions in the last three decades suggests a break in the monopoly of international arbitration centres in North America and Europe but the current situation still resembles a battle between David and Goliath. Institutions such as the ICC, LCIA and the ICDR, have a lead on these other institutions which have since been established. Hong Kong and Singapore have partially bridged this gap but this remains untrue for other institutions. While the other arbitration centres outside the metropolitan hub have the potential to break the monopoly of these older institutions, the road ahead is still long and arduous.