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  • Writer's pictureREET PARIHAR


Updated: Jul 19, 2022


ARBITRATION: Introduction Arbitration, along with the judicial settlement, is one of two methods for resolving disputes. In contrast to judicial settlement, which is distinguished by the fact that a dispute is resolved by a standing tribunal, such as the International Court of Justice, arbitration is created by the parties to the dispute. They can appoint arbitrators. Procedural law is the law that governs the arbitration proceedings. And applicable law refers to the law that applies to the dispute. Arbitration can be classified in a variety of ways.

First, the parties to the dispute can be distinguished. Inter-state arbitration can take place between two states.

Mixed arbitration refers to disputes between states and non-state actors such as individuals or private companies. Alternatively, between two non-state actors.

A second categorization is based on how the arbitration is conducted. Arbitration can be ad hoc, in which case the parties to the dispute determine and agree on the arbitration procedure and are not subject to the procedures of an arbitral institution. The other method is institutional arbitration. In institutional arbitration, the parties rely on the procedural rules of a selected arbitration institution and are assisted throughout the procedure by that institution. Many different arbitration institutions can help arbitral tribunals in resolving disputes. The Permanent Court of Arbitration in The Hague is the most prominent institution for international law disputes. In the case of investment disputes between a state and a foreign investor, the International Centre for the Settlement of Investment Disputes is based in Washington. The third classification involves dividing arbitrations according to the subject matter of the disputes. Arbitration of commercial law disputes among two private parties can thus be distinguished. Disputes over investment between states and foreign investors Or conflicts between states over maritime law, such as boundary determination. History Even in ancient Greece, early forms of what we might call arbitration were used to settle disputes between allied states and city-states over their independence and sovereignty. Arbitration was also widely used in the Middle Ages. During those arbitrations, the dispute was frequently resolved by a single arbitrator known as an Empire. The Pope, or a King or Emperor from another state was frequently the sole arbitrator. However, these arbitrations involved entities other than what we now refer to as states. And how the dispute was resolved was not typical of modern practice. The decision was frequently based on equity principles rather than legal principles, was not reasoned, and the arbitrators were not fully independent and impartial. With the 1648 peace treaties of Westphalia, which ended Europe's 30 years of war, and the subsequent primacy of state sovereignty, arbitration almost vanished in interstate relations. However, arbitration reappeared near the end of the 18th and 19th centuries. These arbitrations paved the way for the modern arbitration we have today. The Jay Treaty arbitration is widely regarded as the birthplace of modern international arbitration. The treaty was signed between the United Kingdom and the United States, primarily to resolve outstanding issues arising from the American War of Independence. In several ways, the mechanism established by that treaty to settle these disputes is remarkable. To begin, the treaty established three different types of commissions. • The first commission was formed to settle the dispute between the two states, which was primarily about boundaries. • The second and third commissions were formed to hear two kinds of mixed disputes. First, claims by British nationals for compensation for debts owed to them by US nationals would be compensated by the US. Second, claims by United States nationals against the United Kingdom for treatment of their property after the United States independence. The treaty paved the way not only for a modern form of arbitration to settle disputes between two states but also for disputes between nationals of one state and another state. Another notable example in this regard is the Alabama Claims arbitration. The dispute concerned damages suffered by the US government as a result of Confederate Navy ships built in British shipyards during the American Civil War attacking union ships. The CSS Alabama was one of the ships. The Washington Treaty was signed by the United States and the United Kingdom in 1871. They decided to settle this and other claims through an international arbitration tribunal in Geneva. The Arbitration Court ruled in favour of the United States, establishing an important precedent for successfully resolving interstate claims through arbitration. This was the beginning of a series of several other mainly interstate arbitrations and paved the a way for the 1899 Hague Convention which created the Permanent Court of Arbitration. Principles of International Arbitration Thus, the first and most important principle of international arbitration is that the arbitral award, the outcome of the arbitration, is binding on the parties. The binding character stems from the fact that the parties to the dispute accept in advance that they will be bound by the outcome by choosing arbitration to settle their disputes. The second, and most fundamental, principle of international arbitration is that it is designed by the parties to the dispute themselves. This is referred to as the principle of party autonomy. This implies that the arbitrators are chosen by the parties to the dispute, the procedural law, which governs how the procedure is carried out, and finally, the law applicable to the resolution of the dispute, known as the applicable law. This principle also implies that the issue or subject matter to be decided by the arbitral tribunal is defined by the parties themselves. The court or tribunal is made up of judges who are appointed or elected for a set term rather than by the parties. Furthermore, the procedure is completely pre-determined, as are the statutes of the courts and tribunals. These rules cannot, in theory, be changed by the parties. In institutional arbitration, the institution to which the dispute is submitted operates under its own set of rules. This implies that this option necessitates the application of the institution's specific procedural rules. However, there are some exceptions to this rule. The Permanent Court of Arbitration is one notable example, as it allows the parties to use procedural rules other than those prescribed by the PCA. The parties can choose which rules they want to use for ad hoc arbitration. Parties are free to create their own rules, as is the case for arbitration under the Law of the Sea Convention, which includes specific procedural rules in Annex 7. The arbitration rules of the United Nations Commission on International Trade Law, UNCITRAL, are the most important set of rules. These rules apply to interstate arbitration, investor-state arbitration, and international commercial arbitration. In the case of an interstate dispute, the parties will almost always request that the tribunal apply international law. In doing so, they have the option of requesting that the tribunal apply a specific convention or convention. This was the case in the Mox Plant Arbitration between Ireland and the United Kingdom under the North-East Atlantic Convention for the Protection of the Marine Environment, or OSPAR. The OSPAR Convention includes a provision requiring any arbitral tribunal established under the treaty to apply the OSPAR Convention and international customary law first and foremost. Parties may also request that an arbitral tribunal apply soft law norms. If the parties are unable to agree on the applicable law, the tribunal will be able to do so. Most arbitration rules give an arbitral tribunal this authority. Article 35 of the UNCITRAL Arbitration Rules and Article 42 of the ICSID Convention are two examples States are under no obligation under international law to refer disputes to a court, tribunal, or arbitral tribunal. The fundamental principle here is that states must agree to settle disputes through legal means, and thus to international arbitration. Arbitration can be agreed to in one of two ways. The first and most common method is to sign a special treaty in which the parties agree to refer an existing dispute to arbitration for resolution. This is known as a 'compromis,' a special agreement, or, in the case of arbitration, an arbitration agreement. The second, and now more common, method is to include a provision in a treaty dealing with a specific set of issues in which the parties agree ahead of time that any future dispute that may emerge under that convention can be submitted to arbitration at the request of any party. This is referred to as a compromissory clause. Once established, the tribunal will decide whether or not it is competent to hear the case. This is known as the 'Compétence de la compétence' principle, which is another legacy of the Jay Treaty Arbitrations. Permanent court of arbitration: When it comes to interstate arbitration, the PCA is the most important arbitration institution. It is housed in the famous Peace Palace in The Hague, which was built in 1913 to house the PCA. The PCA is an intergovernmental organization that was established in 1899 at the First Hague Peace Conference. The Russian Tsar Nicholas the Second convened the First Hague Peace The conference, among other things, to strengthen the means of resolving international disputes peacefully and avoiding the use of force. The conference resulted in the signing of several conventions, including the Pacific Settlement of International Disputes Convention, also known as the first Hague Convention. The PCA is made up of several organs. The International Bureau, which serves as the PCA Secretariat which is led by the Secretary-General is the most important. The bureau's primary function is to provide administrative support to the tribunals and to serve as their registry. The PCA also has an administrative council made up of the contracting parties' diplomatic representatives. The administrative council functions as a sort of general assembly, shaping PCA policy and overseeing the work of the International Bureau. CASE LAWS: The South China Sea The case centred on the parties' maritime rights in the South China Sea. This is significant because the dispute between the Philippines and China was much broader, encompassing issues of territorial sovereignty and maritime delimitation. The tribunal lacked jurisdiction to hear claims involving land rights, such as those in the South China Sea. It could only resolve the issue of China's alleged historic rights in the South China Sea, as well as the legality of certain Chinese activities in the region. China claimed ownership of the ocean's living and nonliving resources within the so-called nine-dash line, which can be seen here. This line appears on Chinese maps, but it extends beyond the UN Convention on the Law of the Sea's limits for China's EEZ and continental shelf. In a nutshell, the tribunal determined that China's claim violated the convention. As a result, China's activities in the area were illegal, including the construction of artificial islands, the operation of maritime surveillance vessels, and fishing. The tribunal also determined that China's fishing practices, land reclamation activities, and artificial island construction had harmed the marine environment severely. The tribunal established a clear standard for determining when a maritime feature is considered an island, resulting in entitlement to maritime zones beyond the territorial sea. Rocks, unlike islands, cannot support human habitation or economic life on their own and thus only generate a right to a territorial sea but no EEZ or continental shelf. Significantly, the tribunal ruled that a feature's status must be determined by its natural capacity to support human habitation or economic life. The key point here is that human intervention does not affect the status of a feature. Here's an example of China's land reclamation activities on coral reefs, which are low tide elevations used to create artificial islands. The tribunal ruled that these activities did not and could not transform low tide elevations into islands. This is an example of how arbitral tribunals can help to develop or clarify maritime law. Although the award is only binding on the parties, it has ramifications for several other South China Sea and beyond states, including the United States.

INTERNATIONAL COURT OF JUSTICE The World Court, also known as the International Court of Justice, is the UN's main judicial organ. It was established in June 1945 by the United Nations Charter and began operations in April 1946. The Court's headquarters are located at the Peace Palace in The Hague (Netherlands). It is the only one of the United Nations' six major organs that are not based in New York (United States of America). The Court's role is to resolve legal disputes submitted to it by States by international law, as well as to provide advisory opinions on legal issues referred to it by authorized United Nations organs and specialized agencies. The Court resolves international disputes through the voluntary participation of the countries involved If a State agrees. The Court resolves international disputes through the voluntary participation of the parties involved. When a state agrees to participate in a proceeding, it is bound by the Court's decision. The International Court of Justice is made up of 15 judges who are appointed for nine-year terms by the United Nations General Assembly and Security Council. The Court may not hear more than one nation from the same country. Furthermore, the Court as a whole must represent the world's major civilizations and legal systems. These organs vote concurrently but separately. A candidate must receive an absolute majority of the votes cast in both bodies to be elected. This necessitates several rounds of voting from time to time. To maintain some continuity, one-third of the Court is elected every three years. Judges can run for re-election. If a judge dies or resigns during his or her term of office, a special election to fill the unexpired portion of the term is held as soon as possible. The Court is made up of 15 judges who are elected for nine-year terms by the United Nations General Assembly and Security Council. It is assisted by a Registry, which serves as its administrative organ. It has two official languages: English and French. How the Court works: The Court may hear two types of cases: legal disputes between states referred to it by them (contentious cases) and requests for advisory opinions on legal questions referred to it by United Nations organs and specialized agencies (non-contentious cases) (advisory proceedings). Cases in dispute

Only States (members of the United Nations and other states that have become parties to the Court's Statute or have accepted its jurisdiction under certain conditions) may be parties to contentious cases. The Court is only competent to hear a dispute if the parties have accepted its jurisdiction in one or more of the following ways: • by entering into a special agreement to refer the dispute to the Court; • by a jurisdictional clause, i.e., when they are parties to a treaty containing a provision providing that, in the event of a dispute of a specific type or disagreement over the interpretation or application of the treaty, one of them may refer to the dispute to the Court; • by the reciprocal effect of declarations made by them under the Statute, where each has accepted the jurisdiction A number of these declarations, must be deposited with the UN Secretary-General, including reservations that exclude certain types of disputes. Proceedings can be initiated in two ways: • Through the notification of a special agreement: This bilateral document can be lodged with the Court by either or both of the States’ parties to the proceedings. A special agreement must specify the subject of the dispute as well as the parties involved. Because there is no "applicant" or "respondent" State, their names are separated in the Court's publications by an oblique stroke at the end of the official title of the case, e.g., Benin/Niger. • Using of an application: A unilateral application is submitted by an applicant State against a respondent-State. It is intended for communication with the latter state, and the Rules of the Court impose stricter content requirements. In addition to the name of the party bringing the claim and the subject of the dispute, the applicant State must, as briefly as possible, indicate on what basis - a treaty or a declaration of acceptance of compulsory jurisdiction - it claims that the Court has jurisdiction, and must state the facts and grounds on which its claim is based. The names of the two parties are separated at the end of the official title of the case. Advisory hearings Advisory proceedings before the Court are only open to five United Nations organs and 16 United Nations family specialized agencies or affiliated organizations. The United Nations General Assembly and Security Council have the authority to seek legal advice on "any legal question." Other United Nations organs and specialized agencies authorized to seek advisory opinions can only do so on "legal questions arising within the scope of their activities."

Every year, the Court reports to the United Nations General Assembly on its activities. The report spans the period from 1 August of one year to 31 July of the following year. It typically includes an introductory summary as well as information about the Court's organization, jurisdiction, and judicial work, as well as reports on visits, events, and lectures, the Court's publications and documents, and administrative and budgetary issues. Case laws: Portugal vs. India,1954 THE CASE'S FACTS Another landmark case of international law is the 1954 case of Portugal vs. India. In the case at hand, Portugal claimed possession of two Indian enclaves in 1954: Nagar-Aveli and Dadra. Portugal claimed in its petition that it has the right of passage to the two enclaves it controls to exercise its sovereignty. The petition also claimed that India was preventing it from carrying out its statutory duties within the two enclaves, and thus requested that the court intervenes in the case. In its affidavit, India claimed that the court lacked jurisdiction over the case and that it was unfounded. JUDGEMENT On November 26, 1957, the court issued its first judgment relating to jurisdiction, which India challenged. In this case, the court rejected four preliminary objections raised by India. The court issued its second decision on April 12, 1960. The court decided that Portugal had the right of passage to the two enclaves, but that it did not extend to Indian armed forces, police, or ammunition. The West Rand Central Gold Mining Company, s/s The King, 1915 THE CASE'S FACTS The case concerned the West Rand Central Gold Mining Company's right petition, which was filed in June 1905. The petitioner claimed that while travelling from Johannesburg to Cape The town before the infamous war between the South African Republic and the United Kingdom, which resulted in the deaths of several people, the South African Republic authorities confiscated two parcels of gold. The war broke out not long after the two gold parcels were seized, and Britain defeated the South African Republic. In its petition, the West Rand Central Gold Mining Company claimed that the responsibility to confiscate any product or goods now falls under the jurisdiction of the state of Great Britain. JUDGEMENT After hearing the petition of the West Rand Central Gold Mining Company, the Divisional Court bench presided over by Lord Alverstone C. J ruled that the principle of international law did not exist, making it impossible for a conquered state to be held liable for the confiscated gold.

CONCLUSION Arbitration provides more flexibility than dispute resolution bodies with set rules or procedures, such as ITLOS or the ICJ. Arbitral proceedings are more efficient and can be kept private. In contrast, judicial proceedings are open to the public. Arbitration also gives the disputing parties greater control over the composition of the tribunal, as well as the option of avoiding third-party intervention. Arbitration, on the other hand, is more expensive than adjudication because the parties must bear their costs as well as the expenses of the tribunal.

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