Trade Law Commission Adopts Model Law on International Commercial Arbitration

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Trade Law Commission adopts model law on international commercial arbitration

The United Nations Commission on International Trade Law (UNCITRAL) on 21 June adopted a model law on international commercial arbitration.

Legal experts from 72 countries and international organizations, participated in the three-week meeting (3-21 June, Vienna), during which the Commission also considered legal obstacles to the use of automatic data processing, a draft legal guide on electronic funds transfers, a draft convention on international bills of exchange and promissory notes, a legal guide to drawing up international construction contracts for large industrial projects, and uniform legal rules on the liability of transport terminal operators.

Chairman of the eighteenth session was Roland Loewe (Austria). Ivan Szasz (Hungary), Luiz G. Paes de Barros Leaes (Brazil) and Houzhi Tang (China) were Vice-Chairmen. Elikunda E.E. Mtango served as Rapporteur.

Model law: The model law, formulated after four years of deliberations, is to be forwarded to the 1985 General Assembly for recommendation to Member States. It is designed to assist with settlement of commercial disputes between parties from different countries. If the model law is widely adopted, uniform procedures and practices will make international commercial arbitration easier and ensure it functions properly by eliminating provisions currently found in national laws.

The Commission in 1980 had surveyed national laws on arbitration, finding that they had been drafted with the prime or exclusive aim of settling domestic disputes. Mandatory and non-mandatory provisions of an applicable law may, however, have adverse effects aggravated by both disparity between national laws and their inadequacy for international cases. At present, international commercial arbitration is subject to traditional and often peculiar procedural rules contained in local codes of civil procedure from which contracting parties may not deviate, even where the country has developed special rules for arbitration and not simply adapted its laws governing court proceedings.

A special internationally-agreed model law for international commercial arbitration would remedy such a situation in two ways: by providing a basis for harmonizing national laws and thus enhancing freedom of choice of the place of arbitration, and by providing a progressive basis for Governments to evaluate their own commercial arbitration law with a view to modernization and improvement.

The model law recommended by UNCITRAL:

* Provides a liberal framework that offers disputing parties a broad scope for agreeing on the rules of procedure--allowing them, for example, to refer in their contracts to the standard procedures suitable for their trade or branch of industry. Where such agreement is lacking, it gives wide discretion to the arbitrators regarding the conduct of the proceeding--including rules for taking evidence. This effectively excludes the use of inappropriate local rules of a court or arbitral procedure and it limits the extent of any intervention of local courts where the arbitral proceedings are taking place;

* Has only a few mandatory rules, intended to ensure fairness and equal treatment of the disputing parties, and provide freedom and discretion for arbitration;

* Contains supplementary provisions to assist in arbitration where parties concerned have not agreed on procedural rules;

* Has provisions on recognition and enforcement of arbitral awards which apply irrespective of the country where the award was made. …