Commercial Arbitration involves advising and advocating with respect to contractual provisions for arbitration and ADR, advising as to appropriate arbitration rules and procedures, and conducting arbitration either ad hoc or under the rules of key arbitration institutions such as the International Chamber of Commerce (ICC), the London Court of International Arbitration (LCIA), the NAFTA, UNCITRAL Rules, ICSID Rules and the Rules of the British Columbia International Commercial Arbitration Centre (BCICAC).
As an alternative to litigation, commercial arbitration cuts across almost every area of law and business activity such as banking; intellectual property; insurance; engineering, construction and infrastructure projects; agreements for joint development of natural resources such as oil and gas; financial and capital markets.
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Modes of Alternative Dispute Resolution (or ADR) has been on the rise since international law and countries have acknowledged its importance. Many have in turn institutionalized ADR through legislations. Over the years, ADR has also grown to adapt to the needs of the States, hence, the specifications of mediation/conciliation and arbitration – and Commercial Arbitration is one.
Generally, there are two modes of ADR – mediation/conciliation and arbitration. Both modes are alternative ways of resolving disputes in a prompt, economical, and confidential manner, outside of litigation which is the “traditional” way. While both may have numerous similarities, the main difference between them is how a dispute is resolved – the end of a mediation/conciliation is an amicable settlement agreed by both disputing parties; while arbitration’s result is an award or ruling, favorable to either of the parties.
Arbitration is one of the alternative ways of resolving disputes, where an arbitrator (or a panel of arbitrators), chosen by the disputing parties, hears the arguments and receives evidence from both parties, and will render an award or ruling which is binding on the parties thereafter.
While States have enacted their own legislations on arbitration, whose backbone are international conventions and laws on arbitration, the applicable law and rules on arbitration will mostly depend on the agreement of the parties (arbitration clause of the contract), the nature of the dispute, and the business of the parties themselves.
What compels the parties to arbitrate is purely dependent upon them. Should they positively decide for it, an arbitration clause is usually inserted in the commercial contract which binds the parties to proceed with arbitration. Sometimes, this arbitration agreement is an entire separate contract from the commercial contract.
Although, even if the parties did not initially agree on an arbitration clause/agreement during the preparation of the commercial contract, it can still be pursued once a dispute later on arises. The lack of pre-agreement does not preclude the parties to eventually agree to proceed to arbitration.
Commercial arbitration is a classification of arbitration which is concerned with and aims to resolve commercial disputes, which covers any kind of economic activity. Parties to any commercial dispute usually includes an arbitration clause in their contract which will primarily govern the procedure of arbitration to be followed once a dispute arises. It may include whether to proceed to ad hoc or institutional arbitration, the scope of the commercial disputes, manner of choosing the arbitrator, and manner of appeal if it is consented, among other terms that the parties may agree to.
Commercial arbitration lawyers may help parties in the preparation of arbitration clauses in their contracts (or if it is a separate arbitration contract), or may also be chosen as an arbitrator.
Advantages of commercial arbitration
There are two forms of commercial arbitration (or arbitration, in general) – Ad hoc and Institutional or Administered.
Ad hoc Arbitration is arbitration without the assistance or outside of an arbitral institution or center. Hence, the rules of procedure of the arbitration would either be agreed upon beforehand, or is patterned from any local or international arbitration statutes. The arbitrator or panel of arbitrators is/are still chosen by both parties, but it does not need to be among those listed by an arbitral institution – as long as freely chosen by parties, they are still deemed valid. In this case, they can be commercial arbitration lawyers and professional arbitrators.
On the other hand, Institutional or Administered Arbitration is arbitration done within the supervision of an arbitral institution or center. When an arbitral institution or center has been chosen by the disputing parties, the procedures of that institution or center will be followed, heeding to its authority to settle the dispute. As such, the arbitrator or panel of arbitrators is/are selected from the list given by the said institution or center, who may still be composed of commercial arbitration lawyers.
The Commercial Arbitration Act of Canada is the federal law governing arbitration relating to commercial arbitration. The Act, which is based on the UNCITRAL Model Law on International Commercial Arbitration 1985 (UNCITRAL Model Law), provides for the default procedures of commercial arbitration. It has also emphasised that a commercial dispute that may arise can either be contractual or not (Article 7(1)).
Also, the Act has specified that there should be no appeals to conduct of arbitration, including the award concluded by the arbitrators or the panel of arbitrators. Commercial arbitration lawyers can represent either party during the arbitration under the Act, especially with the interpretation of the UNCITRAL Model Law.
Generally, the Act only applies when one of the parties is the government (or the Crown), a department of the government, public corporation, or maritime or admiralty matters, as provided in Section 5(2). Outside of these, the law on arbitration that would govern are the territorial or provincial legislations on commercial arbitration. It is advisable to consult with commercial arbitration lawyers which law would apply for a specific commercial transaction or dispute.
For international commercial arbitration, except for Québec, which is governed by its Civil Code and Code of Civil Procedure, other territories of Canada have their own respective legislations which the best commercial arbitration lawyers must be aware of. These provincial or territorial arbitration legislations have also referenced or has purely adopted the UNCITRAL Model Law, which is the international law governing international arbitration.
As to provincial commercial arbitration, the territories or provinces have also enacted their own legislations, which may vary from one province or territory to another. Some examples are the jurisdictions of the courts and their power to halt judicial proceedings and prioritize arbitration first; matters referred to mediation or arbitration; formal requirements for arbitration; appeals – when permitted or not; among others.
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