Irkutsk, May 2018

ARBITRAGE

Baikal State University

Class: International Taxation
Professor: Stepan Bykov
Student: Marko Cvetkovic
 TABEL OF CONTENTS

1. DEFINITION............................................................................... 3

2. CHARACTERISTICS OF INTERNATIONAL TRADE ARBITRATION. . .4

3. TYPES OF INTERNATIONAL TRADE ARBITRATION.......................6

4. CONCLUSION............................................................................ 9

1. DEFINITION
In legal theory there is no single concept of arbitration, meaning

that it depends more on the different approaches to defining it.

Therefore, we can say that arbitration in a functional sense is a

particular method or technique used by arbitrators who are

appointed by the parties in dispute and have the authority to

resolve contentious issues, but its powers are based on a private

agreement, not from the power of the state. The organization of

the arbitration encompasses the institutions that are established

by professional organizations and private persons with the aim to

resolve specific cases. In other words, the arbitration body of the

non-state character is composed of one (or more) persons chosen

by the parties in dispute, to whom the parties agree to voluntarily

entrust to decide on the merits of the case. A law equates this

decision to a final court decision.

When it comes to international commercial arbitration, the

definition of M. Jezdic believes that under foreign trade arbitration

should be encompassed those institutions that have been

established by professional organizations or private persons or

organizations with the partly public character in order to discuss

those disputes of foreign trade for with contracted their

jurisdiction.

From the above definition it is clear that the authors approach to

defining the concept by pointing to organizational and

institutional and functional aspects of arbitration. On the other

hand, some authors have committed themselves to giving a

concise definition of arbitration, arguing that its essence cannot

be understood without stating all its essential elements or

components.

2. CHARACTERISTICS OF INTERNATIONAL
TRADE ARBITRATION
It is noteworthy to mention that arbitration did not arise after the

occurrence of the state judiciary, but it exists in parallel with the

courts; has certain advantages and disadvantages compared to

the state judiciary. Arbitration may be adequate in the resolutions

of disputes in international trade because it adapts the

characteristics of individual cases, not as it is the case in the

courts, whose organizational structure and rules of procedures are

set firmly, in advance, for an unlimited number of very different

cases. In addition, the arbitration procedure is much more

flexible, less formal, there is a possibility of finding a compromise

solution, and it is much faster.

Such means of dispute resolution is particularly useful if one takes

into account the structure of interest, which are bind to the

arbitration decision. The general interests of society exist, but

they are largely minor importance in arbitration than in ordinary

courts. Arbitration can decide only in cases in which the will of the

parties themselves could not replace the judgment if the parties

settled. Accordingly, arbitration is not able to decide on the things

that need to be applied to mandatory standards regardless of the

will of the parties, where it is immediately and intensely

interested society as a whole. It follows that foreign arbitration

cannot decide, for example, the import or export licenses,

customs duties or other matters of state regulation of foreign

trade, but can decide on mutual rights and obligations of the

parties.

Traditionally considered to be the subject of arbitration compared

with judicial dispute resolution:

 Flexible process that can be greatly shaped by the parties

themselves;

Speed;

Lower costs;

Neutrality (rather than by a court of the state or either litigant,

the deciding institution which doesnt belong to one nor the other

country, and arbitrators - or at least the presiding judge - as a

rule, is from a third country);

Due to the great success and wide acceptance of the New York

Convention on the Recognition and Enforcement of Foreign

Arbitral Awards of 1958, the greater are the chances that

overseas decisions are recognized and enforced, rather than the

court decisions.

On the other hand the arbitration decision has its negative side.

Since the parties themselves create a mechanism for decision-

making, they increase the possibility of abuse, such as the

imposition of unjust solutions to economically weaker or careless

party.
 3. TYPES OF INTERNATIONAL TRADE
ARBITRATION
There are two basic types of international commercial

arbitration: ad hoc and permanent arbitration or institutional

arbitration.

Ad hoc arbitration is created by parties that seek to resolve the

dispute or to solve a case, where usually one or three arbitrators

are appointed. The arbitrators may be known lawyers, experts in

foreign trade, as well as experts on specific issues (especially in

the case of a dispute over the quality of goods). The arbitrators

shall meet at a place determined by the parties and in the way

agreed by parties to keep up the process. In the event that the

parties fail to determine the location and method of procedure,

that selection can be made by arbitrators. Thus, we see that the

will of the parties has a major impact on the procedural rules as

well as technical parts, such as, for example, keeping the

minutes. This type of arbitration, ad hoc, is temporary in its

nature. Its function is limited to the resolution of the specific

dispute and stops adjudication of the dispute. In practice this kind

of arbitration prevails, which is not surprising if we consider the

advantages of this type of arbitration, such as the adaptation to

the circumstances of the particular case and the possibility of the

parties to select the process that they prefer, and which as a final

result can be a key factor for the success of arbitration. Of course,

there are also some disadvantages, such as the quandary in the

absence of a predetermined form and a possible lack of eligibility

and inexperience arbiters.

On the other hand, the permanent (institutional) arbitrations are

those that have been formed for an indefinite period to address

an unspecified number of disputes. They have a permanent

organizational structure, technical requirements and rules of

procedure. They can occur in two forms: with occasional

arbitration or independently as a permanent tribunal. In the first

case of pre-determined possible composition of arbitration, or

separately for each individual ad hoc form a slow arbitration. A

typical example of this type is the Permanent Court of Arbitration

based in The Hague, which was established at the first Hague

Conference in 1899. It is not a permanent court in the true sense

of the word, but is a pre-compiled list of persons who may be

elected for the arbitrators. This form occurs in more recent times
and it has a tendency to institutionalize ad hoc arbitration. This is

done in a way that reputable associations and organizations such

as the Economic Commission UZ for Europe, and for Asia and the

Far East, the International Chamber of Commerce, ILA (World

Association of International Law) and UNCITRAL, formulate model

policies on the structure and rules arbitration proceedings, which

are available to the parties.

The jurisdiction of the Permanent Arbitration is also established by

the will of the parties as well as in ad hoc arbitration because

without the agreement of the parties permanent arbitration have

no jurisdiction. Though, organizationally they exist both before

and after the decision, to whom the customers give the power to

lead their dispute. It could be summed up as a service where

customers can turn if they wish so.

Institutional arbitrations are most often organized by chambers of

commerce. Incentives for this type of arbitration is that the

parties and the arbitrators are exempt from legal - organizational

and technical tasks. Correspondence and delivery of letters are

done by the administration of arbitration and the arbitrators shall

act according to the rules of an arbitration institution. At the same

time, it is also the advantage of this type of arbitration, because

in this way the possibility of abuses is reduced.

4. CONCLUSION
In legal theory, there is no single concept of arbitration, which

depends on the different approaches to defining. About

arbitration, we can say that this is the body of the non-state

character composed of one (or more) persons, to whom the

parties agree to voluntarily entrust adoption of the merits of the

case. Law equates that decision to a final court decision. In the

international commercial under the arbitration should be

encompassed those institutions that have been established by

professional organizations or private persons or organizations of

partly public character in order to discuss those disputes of

foreign trade.

In establishing international trade arbitration and special

mechanisms of it for resolving disputes, there are certain

advantages and certain disadvantages. Benefit is definitely that

the parties themselves determine the rules by which they will be

resolving a particular dispute, ie. In the arbitration of disputes will

of the parties is in the first place. However, much of this has its

advantages, there are disadvantages that may arise, such as, for

example, that the stronger party has more influence on the final

outcome of the judgment.

There are two basic types of arbitration in international trade:

permanent (institutional) and an ad hoc, temporary arbitration,

which are formed to resolve a dispute, and after that, they cease

to operate.

Sources of law governing international commercial arbitration are

different, some are international, while others are internal, some

of them are mandatory, while others are of optional characters,

some are created by the state and some other created by

organizations. Review of the sources of international commercial

arbitration shows us that the autonomy of the will of the parties is

in the first place and it is a governing principle, and therefore

imperative norms in this area are reduced to a minimum, but also

necessary given that the international commercial arbitration is

creation which can be effective only within a legal system.

Its complicated to talk about the process of international

commercial arbitration, because the process is significantly

affected by the parties themselves, or arbitrators, in addition,

there are no uniform rules of conduct of arbitrage within one

country. In particular, it would be difficult to carry out some

conclusions about the process of ad hoc arbitrations, since they

do not have the pre-formed procedural background. Another

complex issue is the determination of the relevant substantive

law on the basis of which international commercial arbitration

disputes are resolved.

In the case where parties are not satisfied with the decision of

arbitrage, there are three basic remedies that parties can use:

Appeal to higher arbitration instance

The claim for annulment

Similar remedies against domestic arbitral decisions and control

of foreign arbitral decisions in the process of its recognition and

enforcement.

In conclusion it could be said that the arbitration is an important

element in international trade, and it stands out from standard

court procedures due to its effectiveness and ability to address

each concern individually. Moreover, the nature of arbitration

seems to treat each dispute with fairness and justice, and

therefore the parties find this way as the most accurate way for

resolving disputes. In the opinion of author arbitration will

continue to play a crucial role in any international disputes.