In Part One of this blog, we explained that formal arbitration offers many advantages over domestic court proceedings when resolving a dispute with a contract partner. We also explained that “formal” arbitration means arbitration “prescribed by law” — recognized, supported, and enforced by law. Here’s how.
“The law” that makes arbitration agreements and awards enforceable, and governs the proceedings, is actually a three-part body of laws and rules:
Part one: international treaties. The pre-eminent international treaty on international arbitration is the New York Convention. Signatories generally recognize any foreign arbitration agreement and enforce any foreign arbitration award made in another signatory country. There are currently 144 signatories to the New York Convention.
Part two: national arbitration laws. Although these are laws of individual countries, they tend to be quite similar, for two main reasons. First, since most countries are signatories to the New York Convention, their domestic arbitration laws are designed to support their treaty obligations — for example, Thailand’s Arbitration Act provides that an award made in a foreign country will only be enforced by the competent court if it is subject to an international convention, treaty, or agreement to which Thailand is a party. Second, many countries adopt, in large part or in whole, the United Nations’ Model Arbitration Law when drafting their own arbitration legislation.
The following table illustrates this uniformity across Southeast Asia and a few other countries with growing regional investment ties:
| Country | NY Convention? | Arbitration Law? | Follows UN Model Law? |
|---|---|---|---|
| Thailand | Yes | Yes | Yes |
| Brunei | Yes | Yes | Yes |
| Cambodia | Yes | Yes | Yes |
| Indonesia | Yes | Yes | No |
| Laos | Yes | Yes | No |
| Malaysia | Yes | Yes | Yes |
| Myanmar | Yes* | Yes | No* |
| Philippines | Yes | Yes | Yes |
| Singapore | Yes | Yes | Yes |
| Vietnam | Yes | Yes | No |
| China | Yes | Yes | Yes |
| Hong Kong | Yes | Yes | Yes |
| India | Yes | Yes | Yes |
| Russia | Yes | Yes | Yes |
*Myanmar began the process of acceding to the New York Convention and adopting the UN Model Law for international (not domestic) arbitrations in March 2012, formally acceded to the Convention on 16 April 2014, and published a draft Arbitration Bill largely following the UNCITRAL Model Law in spring 2014.
Part three: the parties’ arbitration agreement. A fundamental difference between domestic litigation and arbitration is the source of the power to decide the dispute. In litigation, it’s the relevant country’s law. In arbitration, it’s the private agreement between the parties. International treaties and national laws are part of the system that supports arbitration, but it’s the parties’ private agreement to submit their dispute to arbitration that actually gives an arbitrator the power to decide it — treaties and national laws merely recognize, support, and enforce that agreement.
Arbitration agreements typically don’t contain enough detail to manage proceedings on their own, and efficient arbitration requires administrative support. Most arbitration agreements therefore specify that proceedings will be conducted “under the auspices of” a given arbitration administrative service provider, following that provider’s procedural rules — incorporating tried-and-tested rules into the agreement without the parties having to draft all the details themselves.
There are several excellent arbitration administrative service providers, and the right choice for a given contract depends on many factors. A few of the leading providers active in Southeast Asia:
- The American Arbitration Association’s international arm, the International Centre for Dispute Resolution — among the most popular providers, with offices in New York, Dublin, Mexico City, and Singapore, conducting arbitrations worldwide.
- The International Chamber of Commerce’s International Court of Arbitration — perhaps the oldest international provider, headquartered in Paris but operating worldwide.
- The Singapore International Arbitration Centre — probably the fastest-growing, now considered one of the top arbitration administration providers globally.
- The Thai Arbitration Institute of the Alternative Dispute Resolution Office, Office of the Judiciary — provides arbitration services for proceedings held within Thailand.
- Hong Kong and Malaysia also have excellent, well-experienced arbitration service centers.
Alternatively, it’s possible to administer your own proceedings. For those who don’t want to draft their own procedural rules, the United Nations has developed a set of rules specifically designed for, and commonly used in, such “ad hoc” arbitration proceedings.