arbitration insights:WITH JACOB MUTEVEDZI
Arbitration, a form of alternative dispute resolution, is a mechanism for resolving disputes outside the court system. The dispute is decided by one or more persons called “the arbitrators” or “the arbitral tribunal”. The arbitral tribunal renders an award which is legally binding on the parties to the arbitration agreement and is judicially enforceable.
In the realm of alternative dispute resolution frequent mention is made of terms such as “international arbitration”, “domestic arbitration”, “ad hoc arbitration” and “institutional arbitration”. The types of arbitration cited above are mere examples and that list is by no means exhaustive. It is important to unpack the meaning of these varieties of arbitration for the benefit of laymen.
Domestic arbitration Domestic arbitration refers to arbitration which takes place within one jurisdiction. Such arbitration is devoid of any foreign-related factors between the domestic companies, individuals or other economic entities involved. The term “domestic arbitration” has not been defined in the Arbitration Act [Chapter 7:15] (“the Act”), however the preamble to the Act as read together with section 3 (1), section 4 and section 5 of the Act makes it apparent that domestic arbitration means arbitration in which the arbitral proceedings take place in Zimbabwe, in accordance with Zimbabwean substantive and procedural law and the cause of action has wholly arisen in Zimbabwe.
International arbitration Globally, there is no authoritative definition of “international arbitration”. Again the Arbitration Act does not define international arbitration. In simple terms, however, it is arbitration of an international character involving companies, individuals or other entities from different countries. While the meaning of “arbitration” is a settled matter, there is no generally agreed definition of the necessary “international” character. The purpose of international arbitration is to provide parties engaged in international transactions with a neutral forum for dispute resolution. Depending on the facts and circumstances of the case and the applicable contract between the respective parties, the law applicable may be Zimbabwean or foreign law. It is important to mention that, increasingly, the term international arbitration is often employed to refer to “international commercial arbitration” for the resolution of disputes between private parties arising out of commercial transactions conducted across national boundaries.
Institutional arbitration An institutional arbitration is one that is administered by an institution agreed upon by the parties and conducted in accordance with that institution’s rules of arbitration. Institutional arbitration is also referred to as “administered arbitration”. Article 2 (a) of the Model law defines arbitration as “any arbitration whether or not administered by a permanent arbitral institution”. Institutional arbitration is, therefore, recognised by the Act. The parties may choose, in the arbitration agreement, to refer the dispute to be determined in accordance with the rules of a particular arbitral institution. One or more arbitrators are appointed in such arbitration from a pre-selected panel by the governing body of the institution or by the parties themselves. In Zimbabwe the most recognised arbitral institutions are the Commercial Arbitration Centre in Harare and the Africa Institute for Mediation and Arbitration. Invariably, the institution’s role in an institutional arbitration includes, among other things, the following: l receiving the request for arbitration from the claimant and serving it on the respondent; l appointing the arbitrators where the arbitration agreement empowers the institution to do so or in default of the parties’ ability to do; l setting and administering the financial arrangements for the arbitration, for example setting a deposit or an advance on fees, and paying the arbitrators’ fees; and l assisting the arbitrators in dealing with any issues that arise relating to the conduct of the arbitration, for example an application for the recusal of an arbitrator. Some of the globally recognised international institutions are, the International Chamber of Commerce (ICC) in Paris, the London Court of International Arbitration (LCIA) in London, the London Maritime Arbitration Association (LMAA), the International Centre for Settlement of Investments Disputes (ICSID) in Washington DC, the Grain and Feed Trade Association (GAFTA) in London, the American Arbitration Association (AAA) in New York and the World Intellectual Property Organisation (WIPO), an agency of the United Nations which deals with intellectual property disputes.
Ad hoc arbitration When the parties themselves agree and arrange for arbitration, it is termed Ad hoc Arbitration. It may be domestic or international in nature. Russell on Arbitration, 21st Edition, on page 42 states the following on ad hoc arbitration: “The expression ‘Ad hoc’, as in ‘Ad Hoc Arbitration’ or ‘Ad hoc Submission’ is used in two quite different senses: an agreement to refer an existing dispute, and/or an agreement to refer either future or existing disputes to arbitration without an arbitration institution being specified to supervise the proceedings, or at least to supply the procedural rules for the arbitration. This second sense is more common in international arbitration.” Ad hoc arbitration is not conducted under the auspices of an arbitral institution. The parties have no obligation to submit their arbitration to the rules of an arbitral institution but stipulate their own rules of procedure. It is a sort of do-it-yourself arbitration. The geographical location of an ad hoc arbitration is of great importance because most of the difficulties concerning the arbitration will be resolved in accordance with the national law of the seat of arbitration. The parties are; however, free to agree to adopt the rules framed by a particular arbitral institution without submitting their dispute to such institution. Further, the parties may provide for an appointing authority to assist them in the constitution of the arbitral tribunal or the appointment of a sole arbitrator. The parties do not benefit from any assistance by an established institution in case of difficulty except from the courts of the seat of arbitration, who may provide support if they have jurisdiction.
l About the author: Jacob Mutevedzi is a commercial lawyer and partner at Clairwood Chambers Attorneys and writes in his personal capacity. He can be contacted at +263775987784 or at [email protected]
