The arbitration as a way of alternative dispute resolution

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Annotation. This article is devoted to one type of alternative dispute resolution, arbitration. The attention is also paid to the arbitration clause, arbitrators and subject of arbitration.

Key words. Arbitration, ADR, arbitration clause, tribunal ad hoc.

Topicality. The democratization of society, business development, improving of the legal culture cause the necessity of adequate defence of the nature person’s rights and the rights of legal entities. The long period of time the society was awared of only one way of rights defence, by court. Today the resolution of civil and economic disputes is also provided by alternative to the court bodies.

The term “alternative dispute resolution” (ADR) contains the procedures of resolving disputes without formal judiciary system. One of these procedures is dispute resolution in the arbitral tribunal. The dispute which falls in jurisdiction of general or economic courts can be arbitrated.

The arbitral tribunal is entitled to adjudicate the case and deliver the final decision. There are some misunderstandings concerning such functions of the tribunal. That is why, the question arises: whether such operations of arbitral tribunal do not violate p. 1 of art. 124 of the Constitution of Ukraine. According to this article, justice in Ukraine is carried out exclusively by the courts.2 The answer to this question is in the decision of the Constitutional Court of Ukraine. This decision was delivered in the case of the constitutional petition of 51 National Deputies of Ukraine concerning the conformity of the provisions of the Law of Ukraine “On Arbitral Tribunals” (hereinafter, the Law) with the Constitution of Ukraine (constitutionality). In this judgment the Constitutional Court expressed its position which is as follows: judicial decisions adopted by the courts on behalf of Ukraine are binding on the entire territory of Ukraine. However, the arbitration tribunal decides only on its own behalf. These decisions are binding only to the disputable parties. Moreover, the enforcement of tribunal’s decisions is not included in the sphere of arbitration and is the function of the competent courts and bodies of bailiff service. So, the Constutional Court of Ukraine concludes that the operations of arbitration tribunals do not violate p. 1 of art. 124 of the Constitution of Ukraine, as the arbitral tribunal does not carry out justice. Tribunal’s decisions are non-state acts which are results of the parties dispute resolution [3].

The p. 2 of art. 12 of Commercial Procedural Code of Ukraine contains a list of disputes that can not be the subject to arbitration. This list includes: disputes on invalidation of acts; disputes arising from the concluding, changing, terminating and performing of economic contracts connected with public needs; corporate disputes and others provided by law [2]. The p. 1 of art. 17 of the Civil Procedural Code of Ukraine also provides for the parties possibility to transfer the dispute to arbitration, except of cases prescribed by law. The Law states the cases in which it is impossible to transfer the dispute to arbitration. According to the p. 1 of art. 6 of this Law, cases which contain state secret; cases of disputes arising from family relationships, except of those which arising from the prenuptial  agreement; the bankruptcy cases; case of disputes concerning real estate, including land; cases of establishment of legally significant facts; labor disputes; cases of exclusive jurisdiction; cases with a non-resident of Ukraine; cases in disputes about consumer protection can not be subject to arbitration [1].

According to Art. 7 of the Law, there are two types of tribunals: permanent tribunals and tribunals ad hoc, that is, those that are formed to hear the specific case. Based on the analysis of legislation, we can observe that in Ukraine there is the way to abuse the opportunity of transfer the case to arbitration. Firstly, the ad hoc tribunals are not registered in the Ministry of Justice of Ukraine. Arbitration clause or agreement can contain the will of the parties to transfer the case to the tribunal formed ad hoc. In addition to this, the requirements to professional skills of arbitrators ad hoc are not stipulated by law. In turn, the decision of the ad hoc tribunals should be enforceable. So, we can conclude that the operations of ad hoc tribunals need to be more regulated in the legislation of Ukraine. Instead, the procedure for the formation and operation of permanent arbitration tribunals is provided by the Law.

To transfer the dispute to arbitral’s resolution, parties should include arbitration clause to the contract or enter into a separate arbitration agreement. In arbitration clause or separate agreement parties may just notice about resolution of the disputes by tribunal, or form specific tribunal, or name specific arbitrators. Arbitrators are impartial referees. They are independent. The Art. 18 of the Law indicates the list of people who can not be arbitrators. This list includes minors; people under guardianship; people without specific professional skills; people who have been convicted; people found incapable by a court; judges of courts of general jurisdiction or the Constitutional court of Ukraine.

Arbitration procedure provides for the parties the right to participate in the hearing of the case personally or through the representatives; to file the challenge; to initiate the examination; to present evidence; the defendant may present counterclaim, so parties have many procedural opportunities. The burden of proof in arbitration lies on both sides. This means that each party must prove the circumstances to which it refers as the basis of its claims and objections. Arbitrator is not entitled to collect evidence. Actually, the problem of collecting evidence during arbitration procedures is very interesting. None of all existed procedural codes shall not be applied to arbitration procedure, so the requirement of the reliability of evidence shall not apply. As A. Mikhalskiy and V. Samokhvalov points out in thier book “Tribunals in Ukraine” that the examination of witnesses during the arbitration proceedure is very relevant issue. This is primarily due to the fact that legal acts do not stipulates the criminal liability of witness in the arbitration procedure. There are doubts in truth of testimonies. One more feature of arbitration is that the procedure is not limited by time, in contrast to the procedures for handling cases in state courts. On the one hand, it is positively, as such optionality allows arbitrators investigate all circumstances in details. On the other hand, it may lead to unnecessary delays in the process [4].

As a result of examination of evidence the court delivers the decision that is declared in the end of the hearing of the arbitral tribunal.

To sum it up, arbitration is a good way to resolve civil and economic disputes. It will help you to save money, time and solve the problem in private atmosphere.

References:

  • Civil Procedural Code of Ukraine: [electronic resource] / Access: http://www.wipo.int/edocs/lexdocs/laws/en/ua/ua025en.pdf.
  • Commercial Procedural Code of Ukraine: [electronic resource] / Access: http://www.wipo.int/wipolex/en/text.jsp?file_id=187649.
  • Decision of the Constitutional Court of Ukraine of the 10th of January, 2008 (in the case of the constitutional petition of 51 National Deputies of Ukraine concerning the conformity of the provisions of the Law of Ukraine “On Arbitral Tribunals” with the Constitution of Ukraine (constitutionality) // The Official Journal of Ukraine. – 2008. – № 3. – P.
  • Mikhalskiy A., Samokhvalov V.: [electronic resource] / Access: http://www.csi.org.ua/tretejski-sudy-v-ukrayini/
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