Advantages of arbitration, why to choose?
There is a growing tendency of solving the disputes between the parties of transaction by applying to arbitration tribunals. The tendency is better noticeable in cases of transactions where the parties are from different states and different jurisdictions.
So what are the advantages of arbitration and how to apply for it?
Freedom to determine the conditions and procedure of dispute settlement is one of the biggest reasons for choosing arbitration. The parties by their mutual consent can determine the place[i], language and even the governing law for dispute settlement. Parties are even free to choose the principles of Ex aequo et bono (from equity and conscience)-which means consideration of what is fair and equitable for the particular case, to govern the procedure of arbitration.
Confidentiality of the procedure is another reason to choose arbitration. One of the main principles of litigation is transparency of the judicial process, whereas in business relations the entities may be willing to choose not to have information about their transactions available and disclosed to public.
One of the main principles for arbitration is avoiding the unnecessary delays in the process. The court are overloaded with hundreds of cases, meanwhile arbitral tribunals can make the decision faster and in considerably limited periods of time.
What is the mechanism to choose arbitration and arbitral tribunals in dispute resolution? The parties mostly include a particular clause in their contracts mentioning the governing law- the legal acts which are referred to the particular contract and the disputes arising from it, as well as the tribunal to which they will be subject to. Another method is conclusion of special arbitration agreement which will cover the conditions of the process as well as the choice of tribunal.
However, the possibility to choose arbitration is not only limited to the above-mentioned methods. Armenian legislation regulates that if the litigation has already started but there is yet no final decision of the court, the parties have a right to make decision to transfer the case to arbitral tribunals.
Choosing arbitration does not mean that the courts cannot have any influence on the process of dispute settlement. There is a possibility under Armenian legislation to challenge the decision of arbitral tribunal, if the latter was made on the contrary with arbitration agreement, was out of the its scope as well as in case the party wasn’t aware of arbitration and was deprived from the opportunity to represent its interests. The Court also can give a performance sheet under the decision in order to compulsorily implement it both in cases of local and foreign arbitral tribunals. The Parties can also apply to the court to assist in the process of evidence collection in case facing any difficulties.
Notwithstanding the advantages of arbitration, any case is unique and legal advice shall be obtained in order to make sure that arbitration is the best choice for particularly your contractual relationships.
Author: Anzhela Abrahamyan, Associate
26/1 Vazgen Sargsyan str, Yerevan 0010, Armenia
Phone: +374 11 520510
This material is produced by Legelata LLC. The material contained in this newsletter is provided for general information purposes only and does not contain a comprehensive analysis of each item described. Before taking (or not taking) any action, readers should seek professional advice specific to their situation. No liability is accepted for acts or omissions taken in reliance upon the contents of this material.
Legelata LLC, 2020
[i] Armenia has ratified New York convention “On recognition and enforcement of foreign arbitral awards”, thus the awards made in other countries which ratified the convention are considered to be binding in the territory of Armenia in case they concern commercial relations.