Dispute Resolution

Abuse of Process in International Arbitration

Over this past decade, the abuse of the process of international arbitration has become a predominant factor in negotiations between countries. The field of international arbitration is now being plagued by misconduct and riddled with procedural disputes[1]. There has been a significant rise in the abuse of international arbitration. The usage of the worst kinds of strategies by litigators all around the world. The abuse in the process of international arbitration has resulted in wrongful settlement of any disputes.

Even though international arbitration offers the leading proposal for the resolution of international disputes, the community of arbitrators constantly scrutinizes the various areas of concern.  As per them, any system of justice, including the arbitration system, should not suffer from abuse. In recent years, arbitration on an international level is under the plague of many different forms of abuse.

 These Abusive practices which are under the incorporation by parties may undermine the fair resolution of disputes and frustrate the administration of arbitral justice. There are tools and legal rules which are already in existence. They are the mercy of the arbitrators who can utilize them to prevent abuse and conduct operations that lead to arbitral justice. However, these tools are impossibly rigid in their application.

What is abuse of process

An abuse of process occurs when a procedural right is exercised in ‘contradiction……with the goal pursued’ in the institution of that right.[2] In other words, an abuse of process refers to an exercise of the lawful right in a manner that is divergent to the object and purpose of the system which provides for the continuation of the right. The theory of abuse of process is ‘an expression of the more general principle of good faith.

What is International Arbitration

The Arbitration and Conciliation act, 1996 defines Arbitration. Arbitration is that form of Alternative Dispute Resolution mechanism which enables the parties to achieve an out-of-court settlement. it is a type of ADR which allows the parties to resolve their dispute without going through a long and costly trial

Arbitration is the process where two parties try to settle the dispute between themselves through a 3rd party (the arbitrator) and prevent the dispute to lead to a lengthy trial.

International Arbitration refers to the same process as above mentioned but, in international arbitration, the parties to the dispute are 2 international bodies.

Prominence of arbitration in international arena

  1. Enforceability: Arbitration judgements are more widely and readily enforceable as against a court judgments. Due to the cost reduction and less time consuming, the decisions are more in appreciation to trials. This has been due to result of the 1958 New York Convention which is a multilateral treaty and is the reason for the enforcement of arbitral awards to which over 150 states are party.
  2. Neutral forum: A party will often prefer not to submit to the jurisdiction of another party’s national courts. International arbitration provides for various forums which are neutral in nature and are in the usage of dispute resolution.
  3. Procedural flexibility: Rules of Arbitration are flexible, streamline, and are a lot less complex than most national rules of CPC. This makes them a better form of procedure to parties from different jurisdictions in nature.
  4. Arbitrators with the proper experience: Arbitrators which are chosen by the parties for their awareness with relevant trade usages, commercial practices and legal structures, and their ability to apply different national laws and deal with comparative law issues.
  5. Party autonomy: The parties to an arbitration can change their dispute resolution process. They may change many aspects of the arbitral procedure, the place of arbitration and arbitrators. They believe will ensure a fair hearing of their case.

Abuse of the process and CPC

In order to recognize the abuse of the process at the international level, the concept of res judicata is applicable. In the context of multiple proceedings, it gives the example of the intersections. This is between the collateral estoppels & res judicata and abuse of the process of international arbitration. The utility of abuse of international arbitration begins when res judicata ends.

As per the concept of res judicata, 5 elements must be there in order to fulfill the criteria:

  1. Matter in issue: i.e. the matter of dispute between the international parties
  2. Former dispute: i.e. there should not be a dispute pending of the same nature against the same country.
  3. Same parties: i.e. the parties to the conflict must be same and no other 3rd party must interfere or act (except for the arbitrator) as a necessary party.
  4. Same title: i.e. the parties to the dispute must be of the same capacity i.e.  country should be in a dispute to a country and not a region or state
  5. Competency: i.e. the arbitrator must be competent enough to act as a arbitrator

However, the powerful countries often interfere with the essentials of res judicata. This leads to the abuse of the process of international arbitration. The parties may change the matter in issue or negate any former dispute for their own convenience. They may elect an arbitrator which may not be competent to the other party and may be biased.

Our Thoughts

The abuse in the process of international arbitration is a constant threat to society as a whole. This corruption often leads to the abuse of the weaker parties and is in great peril in the coming times.

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by Sushree Swagatika

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