Is There a Fundamental Right to Arbitration?

Is There a Fundamental Right to Arbitration?

By
Colin Roberts

1.0.0 Introduction

In order to answer the above question, it is first necessary to understand exactly what the question is asking.

Fundamental is defined as¹:

"...Adjective forming a necessary base or core; of central importance: the protection of fundamental human rights."

For the purposes of this exercise, the author will assume a narrower definition of "Fundamental Right" as the right of every party in a dispute.

Arbitration can be divided into two categories: Domestic and International. Arbitration is defined as:

"The adjudication of a dispute or controversy on fact or law or both, outside the ordinary civil courts, by one or more persons to whom the parties who are at issue refer the matter for decision."²

This definition applies to arbitration in general. International arbitration is defined as:

"...a specially established mechanism for the final and binding determination of disputes, concerning a contractual or other relationship with an international element, by independent arbitrators, in accordance with procedures, structures and substantive legal or non-legal standards chosen directly or indirectly by the parties."³

Both definitions feature the existence of a dispute, the need for adjudication and the result of which there is a decision. In particular, it indicates that arbitration is voluntary. An implicit feature is that it is confidential. Therefore, for the purposes of this exercise, the author will assume that the term "arbitration" is generic, which includes both domestic and international arbitration.

 

2.0.0 Human Rights

Article 6(1) of the European Convention on Human Rights (1950)⁴ (ECHR) guarantees that:

"In the determination of his civil rights and obligations or of any criminal charge against him, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law......"

In addition, Article 8 of the Universal Declaration of Human Rights (1948)⁵ provides that:

"Everyone has the right to an effective remedy by the competent national tribunals for acts violating the fundamental rights granted him by the constitution or by law."

Thus, these articles guarantee the parties of a dispute to a fair and public hearing by a competent national tribunal.

An international arbitration conforms to these rights in three of the five categories mentioned above. That is:

• it is a dispute
• it demands adjudication, and
• it results in a decision

However, the feature of confidentiality, which itself is a contradiction of Article 6, and choice to submit to arbitration lead to the premise that the parties, in choosing arbitration, waive their rights to a hearing in a national court.

Many constitutions of states (Contracting States) that are signatories of the Convention on Recognition and Enforcement of Arbitral Awards (1958) ("New York Convention") obligate their national courts to assist arbitration in accordance with Article II, and have the authority to refuse to recognize and enforce an award in accordance with Article V.

Article II of the New York Convention provides that:

1.

"Each Contracting State shall recognize an agreement in writing under which the parties undertake to submit to arbitration all or any differences which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not, concerning a subject matter capable of settlement by arbitration."

2.

"The term "agreement in writing" shall include an arbitral clause in a contract or an arbitration agreement, signed by the parties or contained in an exchange of letters or telegrams."

3.

"The court of a Contracting State, when seized of an action in a matter in respect of which the parties have made an agreement within the meaning of this article, at the request of one of the parties, refer the parties to arbitration, unless it finds that the said agreement is null and void, inoperative or incapable of being performed."

In brief, Article V provides that a contracting state may refuse recognition and enforcement of an award only on the basis of:

1. Lack of a valid arbitration agreement (voluntary not compulsory)
2. Denial of an opportunity to be heard
3. An excess of jurisdiction by an arbitrator in deciding matters beyond the scope of the arbitration submission
4. Procedure contrary to the parties' agreement, and
5. Annulment of the award under the law of the country in which it was rendered

It is a constitutional right in most cases to arbitrate. However, the contracting state has the right to annul an award under its own laws. An example of this is that in some states, certain cases cannot be brought to arbitration, but must be dealt with in the national courts. Criminal and bankruptcy cases are a typical example of this. Some states allow arbitration only in commercial or monetary disputes. For example, Article 3 of the Arbitration Law of the Peoples Republic of China (1994)⁶ prohibits arbitration in cases involving:

1. Marital, adoption, guardianship, support and succession disputes;
2. Administrative disputes that laws require to be handled by administrative authorities

3.0.0 Summary

The ECHR makes no reference to Arbitration. However, the EHCR Article 6(1) provision of a fair trial is not in conflict with the principles of: due process, fair hearing, independence and impartiality of arbitrators which are the fundamental components of arbitration, guaranteed by Article 6(1) EHCR and also safeguarded in Article V (1)(b) of the New York Convention.

However, it can be argued that in an International Commercial Arbitration, International business has no need of protection of its human rights as protection is adequately afforded by the New York Convention.

Likewise, the Universal Declaration of Human Rights makes no specific mention of arbitration but contracting states with similar provisions in their constitutional framework renders arbitration in conformity if agreed to voluntarily.

Therefore, Arbitration is a fundamental right protected by the New York Convention; however, a fundamental right subject to the arbitration conforming with Articles II and V, and subject to the constitution and the law of the country in which it is rendered.

Arbitration is guaranteed by obligation through the ratification of the New York Convention.

Hale Legal's in-house team is your one-stop firm for all International and Domestic Commercial and Investment Arbitration with international accreditation through the Chartered Institute of Arbitration ("CIArb").

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¹ Oxford Dictionary of English, Oxford University Press, 2003.

² Walker, D.M., Principles of Scottish Private Law, (3^rd Ed, 1982) I, 60, quoted from Hunter, R.L.C., The Law of Arbitration in Scotland, Reed Elsevier, (UK) Ltd (2002).

³ Lew, D.M., Mistelis, L.A. and Kröll, S.M., Comparative International Commercial Arbitration, Kluwer Law International, (2003).

⁴ http://www.hrcr.org/docs/Eur_Convention/euroconv3.html European Convention on Human Rights (1950).

⁵ http://www.un.org/Overview/rights.html, Universal Declaration of Human Rights (1948).

⁶ Arbitration Law of the Peoples Republic of China (1994).