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The primary role of an arbitral tribunal is to apply the law and make a dispute decision by

administering a so-called arbitral award. Illustrate.

Introduction

Generally all people are concern about law and justice, for solution to any dispute people legally
proceed to court that process is known as litigation. Moreover this process is lengthy and costly,
which is not liked in businesses. On the other hand, there is an alternative to litigation which is
known as ADR (Alternative dispute resolution) techniques. In contrast, ADR is less costly and
less time consuming. For instance, arbitration is the most widely recognized and accepted ADR
process, which is a legal process in which two or more persons agree to allow a neutral person to
resolve their disputes.1 The person who help to resolve dispute is called arbitrator. Meanwhile
there are few advantages to use an arbitrator, such as he or she is mutually agreed upon by the
parties, has the trust of both the parties, and the arbitrator is already an expert in the subject
matter, so less tome is needed to educate him or her from the dispute. As a result a quicker
resolution of the dispute and a decision respected by both parties, also known as arbitral award.
The arbitration award may or may not be binding. More and more parties to international
contracts are choosing arbitration as the preferred mechanism for the resolution of international
commercial disputes.2 Attempts by the international business community to standardize arbitral
rules and procedures have resulted in the creation of organizations such as the United Nations
Commission on International Trade Law, the International Chamber of Commerce, the American
Arbitration Association, the London Court of Arbitration.3 These organizations have established
rules to address issues concerning arbitral proceedings, tribunal, and awards. So the purpose of
this assignment is to illustrate the use of laws in an arbitral tribunal and make a decision to the
dispute.

th

Meiners, R. E., Ringleb, A. H., & Edwards, F. L. (1994). The legal environment of business. (5 ed.). Minnaepolis, MN: West
publishing company.
2

Mallor, J. P., Barnes, A, J., Bowers, T., & Langvardt, A. W. (2013). Business law: The ethical global and e-commerce
environment. New York, NY: McGraw-Hill Companies.
3

rd

Clark, L.S., Kinder, P. D., & Hotchkiss, C.(1991). Law and business: The regulatory environment. (3 ed.). New York, NY:
McGraw-Hill Companies.

Arbitration

An arbitrator or an arbitral panel act like a court, they hear what the parties and their witnesses
say and give a resolution to the dispute. In arbitration the parties, cannot claim about the
outcome. To resolve one or more disputes by arbitration, the parties must enter into an arbitration
contract, which is a binding agreement in which they promises to forgo court action to resolve a
particular dispute or any dispute arises between them or an arbitral clause when a provision in a
contract concerning a specific arrangement. Ordinarily, the person or persons the parties select to
serve as arbitrator are well acquainted with the nature of the transaction in dispute and with
related industry and business practices. This makes it highly likely that the decision reached by
these persons will be more closely tied to the parties expectancies and need that the decisions of
a court. In reaching that decision, an arbitrator or an arbitration panel need not follow the
substantive rules of law that a court would be obliged to invoke unless the arbitration agreement
requires this to be done. However, an arbitration award also be made for payment of some
money. The arbitrator or arbitration panel will probably reach a decision more quickly and
economically than would a court proceeding.

Types of Arbitration

Commercial Arbitration
Arbitration in a business related dispute is said to be commercial arbitration. An agreement to
arbitrate such a dispute may be in the form of an arbitration contract or an arbitration clause. In
either case the agreement to arbitrate is treated like any other contract. Detail of the arbitration
process, such as the number of arbitrators, the selection of the arbitrator, and the manner in
which the arbitrator is to form his or her designated task, may be included in the arbitration
agreement. However the parties may simply say that arbitration is to be carried out according to

the rules of a named body. When this is done the parties and the arbitrator are bound by those
rules.

Labor Arbitration
Arbitration intended to resolve a dispute between an employer and a union or a union member is
called labor arbitration. A labor arbitration arrangement is entered into between a firm and the
union that represent the firms unionized employees. Generally the arrangement is part of a
collective bargaining agreement that governs many aspects of the employer-unionize employee
relationship. Such an arrangement requires that any grievance that is any dispute between a firm
and a union member, be resolved by arbitration. At times, however the employee right in
question may be of such public importance that the employee is free regardless of the
arrangement, to have a court rule on the dispute. For instance an employee who claims the
minimum wage established by federal law is not bound by the arbitration clause of a collective
bargaining agreement. In such cases the employee may bring a lawsuit to solve the dispute.
Many claim that employees rights are not sufficiently protected when they are forced, as a
condition of being hired, to agree to arbitrate all disputes and thus waive their rights under
statutes specifically designed to protect employees. The United States Supreme Court, however,
has held that mandatory arbitration clauses in employment contracts are generally enforceable.

The Arbitration process

The arbitrator process begins with a written submission in which the parties refer a dispute to an
arbitrator. Depending upon the nature of their agreement and type of dispute, the parties may
submit question of fact, law or both, with in a definite time period after the dispute arisesgenerally six months. After the submission, the arbitrator is selected and a hearing is scheduled.
The parties will set the rules off the hearing either with or without assistance of the arbitrator and
then give the arbitrator the power to enforce those rules. With the close of the hearing, the
arbitrator will reach a decision, called an award, this decision must generally be delivered by the
arbitrator within thirty days of the close of hearing. Most state statues required that the award be

provided in writing. However, whereas the court system requires written legal opinions, under
arbitration the arbitrator need not state his or her findings of fact or legal basis of the decision
unless the parties have requested that they be provided. After the arbitrator has delivered the
award, the losing party may appeal the decision to the court system. As the courts provides only
limited review of an arbitrators decision. No matter how mistaken the arbitrator may have been
in applying the law, the courts will generally not overturn the award. On the other hand, the court
will not allow an award that requires either party to commit a crime or that undermines public
policy.

Award

Arbitrators must personally decide the disputes that they have been authorize to decide. They are
not empowered to go beyond their assigned tasks. For instance an arbitration agreement may call
for nothing more than a decision as to whether something did or did not occurred. In all
arbitration processing under that agreement, the arbitrator has no power to decide anything else.
When an agreement does not require an arbitrator to follow established legal principles, he or she
is free to use broad principles of justice and equity to determine the partys right and duties.
An arbitrators written decision is known as award. If the arbitration agreement calls for a panel,
all of the panelist must be present when the arbitration hearing begins and must take part in the
pre-award deliberations. Usually their deliberations are not carried on the parties presence.
Unless requested by the arbitration agreement, neither the fact on which the award is based nor
the standard used to determine the parties right and duties need to disclose. Unless the arbitration
agreement requires unanimous approval, only a majority of a panels membership need agree on
the award. The award should be based on a reasonable interpretation of the evidence.
An award should clearly precisely and completely answer all of the questions submitted to the
arbitrator. Its terms must be consistent with one another. If not barred from doing so by the
arbitration content, it may call for a remedy or remedies other than those requested by either of
the parties. The arbitrator must inform the parties of the award. If the arbitration agreement or

arbitration statute does not require that this be done in a particular way, it may be done in any
way that the arbitrator selected. When the parties have been informed of the award, the
arbitrators task is finished.
If one of the parties to an arbitration agreement start a lawsuit to resolve a dispute, the court in
which the suit is brought must decide whether the law of the given state, the law of another state,
federal law, or even the law of a foreign nation should be used to rule on whether the dispute is
to be resolved through arbitration or through litigation. If the arbitration agreement states the
parties preference as to the jurisdiction whose law should be followed, the court will respect
their choice unless it concludes that this would lead to an unjust result. If the agreement makes
no mention of jurisdiction, and all of the factors relating to the dispute are connected solely with
the state in which the lawsuit has been initiated, the court will use local law to decide the effect
of the arbitration agreement. If the arbitration agreement or significant features of the transaction
in question have some connection with other states or nations, the court will use local law to
decide which states or nations law should govern. The court will also consider whether federal
law is applicable.
Ordinarily, an arbitrators award is final and binding on the parties. If they honor the award, the
disputes is at the end. However, should one of the parties refuse to honor the award, the other
party may enforce it through the legal system. This is done by filling a petition to confirm the
award with the appropriate court. The petition asks the court to convert the award into judgment.
If the request is granted, a judgment is entered that entitles the successful party to the relief
specified in the award. The judgment is enforceable in the same way as any other court
judgment. A far less complicated process is available in those stares that permit an arbitration
agreement to provide for the conversion of an award into a judgment. If the request is granted, a
judgment is entered that entitles the successful party to the relief specified in the award. The
judgment is enforceable in the same way as any other court judgment. A far less complicated
process is available in those states that permit an arbitration agreement to provide for the
conversion of an award into a judgment simply by filling a copy of the award with the clerk of a
designed court. The party dissatisfied with an award is confronted with the extremely limited
power of a court to set it aside. Because the parties have agreed to arbitration, a court has no
power to rehear the dispute, or substitute its judgment for that of the arbitrator or arbitration

panel, or to act as an appellate body. It may not cancel an award merely because the arbitrators
or panels determination is based on a standard that it would not have used or that it would have
used at a different conclusion. Despite the parties agreement to resolve their dispute by
arbitration and the failure of either party to object to arbitration, a court asked to confirm an
award may generally consider and rule on such questions as the following: Does the arbitration
agreement fulfill the requisites for an enforceable arbitration contract? Does the arbitration
agreement violate public policy? Have the pre-arbitration procedures and the specified processes
for selecting an arbitrator or a panel been satisfied? Is the dispute arbitrable? Was there
arbitrational due process? Dis the arbitrator act within the authority conferred by the arbitration
agreement? Is the award within the range of the results permitted by the arbitration agreement?
Were the laws technical requirements observed?4 A court may cancel an award if it finds that
any of the answers to these questions unsatisfactory. In addition a clearly unjust award an award
resulting from arbitrary action or an award brought about through fraud or corruption will not be
allowed to stand.
To be enforceable the arbitration agreement must be writing. A court may not stay arbitration on
the ground that the party demanding arbitration has not shown that his or her claim is enforceable
in a court or that he or she is entitled to an award. If the arbitration agreement does not state how
an arbitrator should be selected or if the person named is unable to serve, at either partys request
a court will appoint an arbitrator. An award brought about by what the act called undue means
that is dishonesty. An award may also be aside if an arbitrator or arbitration hearing, or
improperly refuses to hear evidence material to the dispute and thus subs substantially prejudices
a partys right, or if there was no arbitration agreement and the party who challenges the award
objected to the arbitration but still participated in it. When a court sets aside an award for some
reason other than its finding that there is no binding arbitration agreement, it may order a
rehearing. For instance a rehearing is ordered when an award is cancelled because the arbitrator
exceeded his or her power or failed to satisfy a necessary step during the hearing. If the court
concludes that the same arbitrator should not rehear the dispute it will appoint a new arbitrator
and when possible, do so as specific in the arbitration agreement. If the arbitration agreement
does not state how an alternate should be selected, the court determines how a substitute should
be chosen and then chooses one. A court may modify an award if there is an obvious numerical
4

Edwin, W., Henkel, J. W., (1992). The legal & ethical environment of business.IL: Illinois. Irwind.

miscalculation or an obvious mistake in describing a person or a piece of property. It may also


eliminate any portion of an award that has to do with a matter beyond the arbitrators power, so
long as that portion is not a critical element of the award and long as its elimination does not
affect the parties right or duties. The arbitration laws of a number of countries prescribe
mandatorily that the award must contain the reasons on which the arbitral decision is based. In
these countries it is considered fundamental that the parties are informed how justice has been
done in their case. In contrast, in several Common Law countries it is customary not to give
reasons in the award. By applying the distinction between domestic and international public
policy, the courts of the countries under the la w of which the giving of reasons is mandatory,
generally enforce awards without reasons made in countries where such awards are valid. Most
arbitral awards are voluntarily complied with and do not require judicial enforcement. It is only
if an arbitral award can be adequately enforced, however, that a successful claimant can ensure
that it will actually recover the damages awarded it. Fortunately, as the courts have noted, there
is an oft-stated federal policy, embodied in the Federal Arbitration Act, favoring the
enforcement of arbitration agreements and the confirmation of arbitration awards. Courts in the
United States pursue a consistent, well-articulated policy of recognizing and enforcing awards in
both domestic and foreign arbitrations; in fact, arbitral proceedings are recognized and enforced
in U.S. courts more readily than are foreign judgments.5 International commercial arbitration is
an alternative to choosing a forum for litigation is for the parties to agree to submit their disputes
to binding arbitration. Usually, arbitration clauses specify the place of arbitration, the number of
arbitrators, and the rules for resolving the dispute. The American Arbitration Association, the
International Chamber of Commerce and the London Court of Arbitration are some of private
organizations with rules for the conduct of commercial arbitration.6 UNCITRAL has also
developed arbitration procedures that have gained wide acceptance in businesses. The same
problems that have applied to choice of forum clauses have also applied to arbitration provisions,
although arbitration is gaining wide acceptance by court in many of the foreign countries.

Joseph T. McLaughlin, Enforcement of Arbitral Awards under the New York Convention: Practice in U.S. Courts, INTERNATIONAL
275, 277 (1988).

COMMERCIAL ARBITRATION at

rd

Clark, L.S., Kinder, P. D., & Hotchkiss, C.(1991). Law and business: The regulatory environment. (3 ed.). New York, NY:
McGraw-Hill Companies.

Threat to an Arbitration Award

Even though, arbitration is said to be beneficial for both parties but there are many challenges
faced in the process of arbitration. Those are as follows

If the award was procured by corruption, fraud, or undue means.

If there was evident partiality or corruption in the arbitrators.

If the arbitrators were guilty of misconduct in refusing to postpone the hearing, even in
light of sufficient cause shown, or in refusing to hear evidence pertinent and material to
the controversy, or of any other misbehavior by which the rights of any party have been
prejudiced.

If the arbitrators exceeded their powers, or so imperfectly executed them that a mutual.
Final, and definite award upon the subject matter submitted was not made.

If the arbitrators disregarded a clearly defined law or legal principle applicable to the case
before them.

If there is no factual or reasonable basis for the award.7

UN Convention on Foreign Arbitral Award

Arbitration and mediation.(2014) retrieved from


http://www.finra.org/arbitrationandmediation/arbitration/process/decisionawards.html

The United Nations convention on the recognition and enforcement of Foreign Arbitral Awards
has been in force in the United States. The United States and 75 other nations are signatories to
the agreement. Each signatory nation agrees to recognize and enforce arbitral awards made in
any other party to the convention in the same way that it would enforce arbitral awards made
within its own jurisdiction. The convention is applicable only to written agreements that call for
the arbitration of disputes over commercial transactions. The tribunal that is asked to recognize
and enforce an award may refused to do so if one of the parties to the arbitration agreement lack
capacity to contract, or if the agreement is not valid under the law of the nation in which the
award was made or under the law of the nation whose law the parties specified should govern it.
An award is unenforceable if the party against whom it was made was not properly notified of
the appointment of an arbitrator or of the arbitration proceeding or not permitted to present his or
her case before the arbitrator, or if the arbitrator lack power under the arbitration agreement to
make such an award, or if the subject matter of the agreement may not be settled by arbitration
under the law of the nation in which recognition and enforcement sought or is against the
nations public policy. The convention does not apply if all of the parties to a dispute are U.S.
citizens, unless the dispute relates to property located abroad or is based on contract that calls for
performance or enforcement abroad or can be reasonably viewed as a having some connection
with one or more foreign state. For purposes of the convention, a firm that is incorporated or has
its principal place of business in the United States is treated as a U.S. citizen.
Federal district courts have original jurisdiction over any action or proceeding covered by the
convention regardless of the amount of money is dispute. The arbitration agreement may
stipulate which district court mat hear a civil suit. The convention does not bar a party from
beginning a lawsuit in a state court, but it governs the rights and duties of the parties to such
litigation. In such cases the state court must abide by the legal principles embodied in the
convention. At any time prior to trail, the defendant may request that the lawsuit be transferred to
the federal district court.

New York convention

The United States acceded to the New York Convention in 1970, and today a total of 96
countries have ratified it (together with two others who have signed but not yet ratified).
Virtually every significant commercial country in the world is a party to the Convention, but
relatively few countries have a comprehensive network for cross-border enforcement of
judgments of the court.8 Article I of the Convention provides that it shall apply to awards made
in the territory of a state other than that where recognition and enforcement is sought; it shall
also apply to arbitral awards not considered as domestic in the state where their recognition and
enforcement are sought.
The following briefly describes the two basic actions contemplated by the New York
Convention. The goal of the [New York] Convention, and the principal purpose underlying
American adoption and implementation of it, was to encourage the recognition and enforcement
of commercial arbitration agreements in international contracts and to unify the standards by
which agreements to arbitrate are observed and arbitral awards are enforced in the signatory
countries.
The first action is the recognition and enforcement of foreign arbitral awards that is arbitral
awards made in the territory of another State. This field of application is defined in Article I. The
general obligation for the Contracting States to recognize such awards as binding and to enforce
them in accordance with their rules of procedure is laid down in Article III. A party seeking
enforcement of a foreign award needs to supply to the court (a) the arbitral award and (b) the
arbitration agreement. The party against whom enforcement is sought can object to the
enforcement by submitting proof of one of the grounds for refusal of enforcement which are
imitatively listed in Article V. The court may on its own motion refuse enforcement for reasons
of public policy as provided in Article V. If the award is subject to an action for setting aside in
the country in which, or under the law of which, it is made, the foreign court before which
enforcement of the award is sought may adjourn its decision on enforcement. Finally, if a party
seeking enforcement prefers to base its request for enforcement on the courts domestic law on
enforcement of foreign awards or bilateral or other multilateral treaties in force in the country
where it seeks enforcement, it is allowed to do so by virtue of the so-called more-favorable-rightprovision of Article VII. The second action contemplated by the New York Convention is the
referral by a court to arbitration. Article II provides that a court of a Contracting State, when
8

Wikipedia. (2013). Arbitration award. Retrieved from http://en.wikipedia.org/wiki/Arbitration_award

seized of a matter in respect of which the parties have made an arbitration agreement, must, at
the request of one of the parties, refer them to arbitration. In both actions the arbitration
agreement must satisfy the requirements of Article II and which include in particular that the
agreement be in writing. Moreover it is also concluded in the convention that awards not
considered as domestic denotes awards which are subject to the Convention not because made
abroad, but because made within the legal framework of another country, e.g. pronounced in
accordance with foreign law or involving parties domiciled or having their principal place of
business outside the enforcing jurisdiction. We prefer this broader construction because it is
more in line with the intended purpose of the treaty, which was entered into to encourage the
recognition and enforcement of international arbitration awards.9

United Nation. (1998). Enforcing arbitration awards under the New York convention: Experience and prospects.
Retrieved from http://www.uncitral.org/pdf/english/texts/arbitration/NY-conv/NYCDay-e.pdf.

Bibliography
1. Arbitration and mediation.(2014) retrieved from
http://www.finra.org/arbitrationandmediation/arbitration/process/decisionaward.html.

2. Clark, L.S., Kinder, P. D., & Hotchkiss, C.(1991). Law and business: The regulatory
environment. (3rd ed.). New York, NY: McGraw-Hill Companies.
3. Edwin, W., Henkel, J. W., (1992). The legal & ethical environment of business.IL: Illinois.
Irwind.
4. Joseph T. McLaughlin, Enforcement of Arbitral Awards under the New York Convention:
Practice in U.S. Courts, INTERNATIONAL COMMERCIAL ARBITRATION at
275, 277 (1988).
5. Mallor, J. P., Barnes, A, J., Bowers, T., & Langvardt, A. W. (2013). Business law: The ethical
global and e-commerce environment. New York, NY: McGraw-Hill Companies.

6. Meiners, R. E., Ringleb, A. H., & Edwards, F. L. (1994). The legal environment of business.
(5th ed.). Minnaepolis, MN: West publishing company.
7. United Nation. (1998). Enforcing arbitration awards under the New York convention:
Experience and prospects. Retrieved from
http://www.uncitral.org/pdf/english/texts/arbitration/NY-conv/NYCDay-e.pdf.

8. Wikipedia. (2013). Arbitration award. Retrieved from


http://en.wikipedia.org/wiki/Arbitration_award