Is the law governing international arbitration based on the UNCITRAL Model Law? Are there significant differences between the two?
International Arbitration (2nd Edition)
Malaysian has based its arbitral legislation upon the UNCITRAL Model Law since 2005. In its original form, the AA sought to mirror the 1985 version of the UNCITRAL Model Law. Notwithstanding this, even before the 2018 statutory amendments, Malaysia had developed its arbitral jurisprudence abreast with international trends and principles of the 2006 Model Law.
With its latest amendments, the AA has been given greater congruence with the UNCITRAL Model Law 2006 with the principles of the Model Law having been incorporated into the statutory text in their original form and phraseology. In this regard, Part II of the AA follows the structure and has identical headings to Articles 3 to 36 of the UNCITRAL Model Law 2006 (with minor exceptions).
Certain revised aspects of the statutory regime should be noted by arbitral parties and practitioners, including:
- Equal positioning of emergency arbitrators and arbitral tribunals (section 2, AA). This resolves possible concerns regarding the recognition and enforcement of awards by emergency arbitrators;
- Further relaxation of formal requirements for valid arbitration agreements (section 9, AA);
- Broadened range of interim measures that can be ordered by arbitrator and enhanced curial powers by the Malaysian High Court to support arbitral interim measures (sections 19-19J, AA); and
- Removal of the statutory mechanism to challenge arbitral awards on questions of law arising out of the proceedings (previously section 42, AA). This now repealed mechanism was similar to challenges under section 69 of the English Arbitration Act 1996 and appeals under section 49 of the Singapore Arbitration Act.
As stated in Section 1 above, international arbitration in Chile is regulated in the International Commercial Arbitration Law No 19.971 (ICAL), which was adopted on September 2004 and it presents no significant differences in respect of the UNCITRAL Model Law.
As the history of ICAL shows, the Chilean legislature deemed necessary to maintain as much as possible the original law redaction proposed by UNCITRAL, in order to promote the development of international arbitration in Chile. Therefore, the modifications made to ICAL in respect of the Model Law, are minimal and specifically related to the competence of the local courts.
LAV is based on the UNCITRAL Model Law and there are no significant differences between the two. However, LAV contains a few particular features, notably the following:
a) The concept of arbitrable disputes, which comprises disputes involving economic interests and disputes which, although not involving economic interests, may be settled by the parties (art. 1 LAV);
b) The concept of international arbitration: arbitration is considered to be international when international trade interests are at stake (art. 49 LAV);
c) Third parties joinder: there are specific rules on the requirements, timing and formalities of a third party intervention in arbitral proceedings, which shall only be allowed if deemed relevant and not disruptive to the normal course of the proceedings (art. 36 LAV);
d) The inadmissibility of pleas based on the domestic law of a party: within international arbitration if one of the parties to the arbitration agreement is a State, a State-controlled organization or a State-controlled company, this party may not invoke its domestic law to either challenge the arbitrability of the dispute or its capacity to be a party to the arbitration, neither to in any other way evade its obligations arising from such agreement (art. 50 LAV).
e) Arbitrators’ fees and costs: if parties fail to regulate such matters in the arbitration agreement, the arbitrators’ fees and costs shall be agreed upon in writing by the parties and the arbitrators. If parties and arbitrators fail to do so, the arbitrators shall fix the amount of their fees and expenses, taking into consideration the complexity of the issues decided, the amount of the dispute and the time spent or to be spent with the arbitral proceedings until its conclusion, and furthermore determine the payment by the parties of their advance payments (art. 17 LAV).
f) The arbitral award is only subject to appeal to the competent State court if the parties have expressly contemplated such possibility in the arbitration agreement, and provided that the dispute has not been decided ex aequo et bono or through amiable composition. (art. 39 (4) LAV)
g) A time limit to render an award: usually of 12 months from the date of acceptance of the last arbitrator, which may be freely (although duly motivated) extended one or more times by an agreement of the parties or, alternatively, by a decision of the arbitral tribunal for successive periods of 12 months (art. 43 LAV).
h) Confidentiality: as a rule, the arbitrators, the parties and the arbitral institutions are bound to keep as confidential all information they obtain and documents brought to their attention in the course of the arbitration proceedings (arts. 30 (5)(6) LAV).
Luxembourg has not adopted the UNCITRAL Model Law as it has no specific law governing international arbitration other than those articles relating to arbitration which have been incorporated into the NCPC on 29 April 1806, and modified, in some cases, by the Grand Duchy Regulation of 8 December 1981. The provisions of the articles of the NCPC are quite similar to the provisions of the UNCITRAL Model Law, but a lot less numerous.
Neither the PILA nor the CPC are based on the UNCITRAL Model Law. There are, however, no fundamental differences between them.
Germany adopted the UNCITRAL Model Law in 1998, but has not adopted the amendments of 2006. As explained under Question 1, the UNCITRAL Model Law was almost fully incorporated into the ZPO. The differences are inter alia:
- While the UNCITRAL Model Law applies to “commercial disputes”, the 10th book of the ZPO is applicable to any kind of arbitration under German law.
- The 10th book does not only apply to international, but also to domestic arbitration proceedings.
The Arbitration Act almost completely mirrors the 1985 UNCITRAL Model Law (in the original version without the 2006 amendments). The only major difference is the scope of application of the Arbitration Act. According to the Article 1(2) of the Arbitration Act the following disputes may be referred by the parties to international commercial arbitration:
- disputes arising out of contractual and other civil law relations in the course of foreign trade and other forms of international economic relations if the place of business of at least one of the parties is situated abroad; and
- disputes arising between enterprises with foreign investment, international associations and organisations established in Ukraine; disputes between the participants of such entities, as well as disputes between such entities and other subjects of the law of Ukraine.
The Panama Arbitration Law is mainly based on the UNCITRAL Model Law with amendments as adopted in 2006. However, there are significant differences between the two. The main differences are the following:
- The number of arbitrators: the default rule under the UNCITRAL Model Law is three (3) arbitrators and the default rule under the Panama Arbitration law is one (1) arbitrator.
- The restrictions in the appointment of arbitrators: the Panama Arbitration Law contains restrictions to the appointment of arbitrators that are not included in the UNCITRAL Model Law. The Panama Arbitration Law provides that a person that has violated the Code of Ethics of an arbitration institution or that has been declared guilty of prevarication, falsehood or fraud cannot be appointed as an arbitrator; and that, for domestic arbitration proceedings, arbitrators that are not deciding the dispute as “amiable compositeurs” or “ex aequo et bono” shall be practicing attorneys-at-law.
- Determination of the applicable law: Contrary to the UNCITRAL Model Law, which provides that “failing any designation by the parties, the arbitral tribunal shall apply the law determined by the conflict of laws rules that it considers applicable”, the Panama Arbitration Law does not force the arbitral tribunal to apply conflicts of laws rules, but rather allows it to directly apply the rules of law it considers appropriate.
- Treatment of interim measures issued by arbitration tribunals: Contrary to the UNCITRAL Model Law, which provides for an equal treatment of interim measures indistinctly of the seat of arbitration, the Panama Arbitration Law does makes a distinction. Interim measures issued by arbitration tribunals seated in Panama (whether in international or national arbitration proceedings) are binding and shall be enforced automatically without review, while interim measures issued in arbitral proceedings seated outside Panama are enforced by the Panamanian courts after being recognized as enforceable foreign orders or measures by the Fourth Chamber of the Supreme Court of Justice of Panama.
- Deadline for rendering the award: Contrary to the UNCITRAL Model Law, which is silent on the deadline for rendering the award, the Panama Arbitration Law establishes that the arbitration tribunal shall issue the final award within two (2) months after the final hearing (for domestic arbitrations) or as may otherwise be agreed to by the parties or as may be established in the applicable arbitration rules (for international arbitrations).
- Treatment of arbitration awards: Contrary to the UNCITRAL Model Law, which provides for an equal treatment of arbitration awards in connection with their recognition, the Panama Arbitration Law does makes a distinction. Awards issued in proceedings seated in Panama (whether in international or national arbitration proceedings) have the same treatment as national judgments and can be enforced directly by the lower courts without prior recognition proceedings. Awards issued in arbitration proceedings seated outside of Panama can only be enforced after going through recognition proceedings (exequatur) before the Fourth Chamber of the Supreme Court of Justice of Panama.
The articles of the UAE CPC which relate to arbitration, are not based on the UNCITRAL Model Law.
These differences mainly relate to procedural aspects, violation of which has in the past been shown to lead to nullification of otherwise valid arbitral awards. Examples include the warranty of authority that a party-representative needs to formally demonstrate (usually through a notarised Power of Attorney), as well the requirement for witnesses to be sworn on oath before their evidence can be formally accepted.
The DIFC Arbitration Law and the ADGM Regulations are both based on the UNCITRAL Model Law.
The Arbitration Act is not directly based on the UNCITRAL Model Law. However, the Model law was considered in the preparation of the Arbitration Act enacted in 1999. No major differences exist. The draftsmen of the new Arbitration Act have pointed out that it was seen urgent that the provisions of the Model Act should be considered in the drafting of every part of the new Arbitration Act (not yet in force).
The SAA does follow the principles established by the UNCITRAL Model Law. Nevertheless, the SAA establishes certain differences in order to promote arbitration within the Spanish jurisdiction, being the most notable differences the one listed below:
- In 2011, an amendment to the SAA was introduced by Law 11/2011, of May 20th. Since then, Section 21.1 of the SAA establishes that the arbitral institutions are obliged to watch over the capacity of arbitrators, the transparency in their designation and their independence throughout the arbitral proceedings. Additionally, arbitral institutions and arbitrators must subscribe to professional liability insurance.
- Any person appointed as sole arbitrator must be a jurist, except if the matter is to be decided ex aequo et bono, unless expressly agreed otherwise by the parties within the arbitration clause. In the case of a three-member panel, at least one arbitrator must be a jurist. The term jurist is used as opposed to a practicing lawyer (term originally used under Section 12.2 of Law 36/1988, of December 5th on Arbitration, which was repealed by the SAA) so as to include academics and other legal professionals who are not lawyers. In addition, the arbitrator(s) must not have acted as a mediator in the same dispute.
- Issuing an arbitral award after the expiry of the deadline does not constitute grounds for annulment of the award, without prejudice to the arbitrators' liability.
- Arbitral awards must be reasoned (except awards on agreed terms) and parties cannot agree otherwise.
- The SAA allows the arbitrators to state in the award if they vote for or against the final decision. This is also intended as a measure to avoid the dissenting arbitrator’s liability.
- The parties may request that the arbitrators correct an arbitral award on an excess of jurisdiction, in addition to supplementing omitted petitions. The referred measure is aimed at avoiding unnecessary actions to set aside awards.
Serbian Arbitration Act is based on UNCITRAL Model Law of 1985, and UNCITRAL lists Serbia as one of countries whose legislation is based on UNCITRAL model law.
As for the differences between the Serbian Arbitration Act and UNCITRAL Model Law, there are a few provisions differing from Model Law. First, number of arbitrators must be odd. Also when a single arbitrator is to be appointed, parties have a 30-day deadline to agree on the single arbitrator. Failing that, the single arbitrator will be appointed by the appointing authority, or by the court. Furthermore, Serbian law provides that an award may be set aside if it is based on a false testimony by a witness or expert, on falsified documents, or if it is the result of a criminal offense committed by the arbitrator or the party (provided that these facts are determined by a final and binding judgement of a criminal court).
The Philippines expressly adopted the 1985 UNCITRAL Model Law through the ADR Act.
The laws governing arbitrations in India are based on UNCITRAL Model Law. In India, the Arbitration & Conciliation Act is divided into four parts:
(i) Part I i.e. governing domestic arbitration,
(ii) Part II i.e. Enforcement of Certain Foreign Awards,
(iii) Part III i.e. Conciliation and
(iv) Part IV i.e. Supplementary provisions
The Arbitration & Conciliation Act, 1996 governs the domestic arbitrations, enforcing of the domestic awards, international commercial arbitration and enforcement of certain foreign awards.
The Arbitration and Conciliation Act, 1996 is based on the United Nations Commission on International Trade Law (UNCITRAL) Model and is broadly compatible with the “Rules of Arbitration of the International Chamber of Commerce”. [Fuerst Day Lawson Ltd. v. Jindal Exports Ltd., (2011) 8 SCC 333].
The LAM governs domestic and international arbitration and the provisions of the LAM are based on the UNCITRAL Model Law in part.
There is a noteworthy difference with the UNCITRAL Model Law, when one of the alternative requirements for international arbitration established in article 41 of the LAM states that the matter of the dispute must be in relation to an "international commercial transaction that can be subject of settlement and does not affect or causes damage to national interests or of the community”. Another important difference worth noting is that the Ecuadorian Organic General Code of Procedures stipulates certain different grounds or requirements for the enforcement of foreign arbitral awards from those provided in the UNCITRAL Model Law. With respect to domestic arbitration, the following relevant provisions of the UNCITRAL Model Law differ from the LAM: a) rules on interim or precautionary measures and preliminary orders as regulated by Chapter IV of the UNCITRAL Model Law; b) waiver of the right to object, as established in art. 4; c) submission of a substantive claim before court in a matter that is the subject of an arbitration agreement, as provided in Art. 8 of the UNCITRAL Model Law; d) court assistance in taking evidence, as regulated in Art. 27 of the UNCITRAL Model Law; e) decision making on questions of procedure by a presiding arbitrator, as mentioned in Art. 29 of the UNCITRAL Model Law; f) termination of the arbitration, as provided by Art. 32.2 (c) of the UNCITRAL Model Law; and, g) the grounds for challenging the independence and impartiality of arbitrators.
The Arbitration Act is based upon and closely follows the UNCITRAL Model Law. There are few significant differences between the Arbitration Act and the Model Law. One major difference is, however, that the Norwegian Arbitration Act does not require that arbitration agreements are entered into in writing.
The Egyptian Arbitration Law is based on the UNCITRAL Model Law. There are some differences, basically in the distinction between domestic arbitrations and international commercial arbitrations (see 1. above).
Croatian Arbitration Act is based on the UNCITRAL Model Law, with some differences relating to the scope of application. Unlike the UNCITRAL Model Law, Croatian Arbitration Act applies both to national and international disputes, as well as to disputes which are not necessarily considered as commercial.
The ICA Law has adopted the UNCINTRAL Model Law of 1985 in its entirety except the fact that the ICA Law contains a definition as to which types of arbitration are considered to be “international” and “commercial”. It should be noted that the ICA Law does not incorporate any amendments made to the UNCINTRAL Model Law since 1985.
French law on arbitration is not based on the UNCITRAL Model Law. However, French law provisions applicable to international arbitration are no less favourable and are substantially more liberal than the UNCITRAL Model Law in some respects – for example, with regard to the recognition and enforcement of arbitral awards made abroad or in international arbitration.
Italian rules concerning arbitration matters are not based on the UNCITRAL Model law, but they do not materially differ from it.
The ACA regulates international arbitrations. It is largely based on the UNCITRAL Model Law with slight modifications. Part I of the ACA (that is, sections 1 to 36 of the ACA) applies to domestic commercial arbitration while Part III of the ACA (containing sections 43 to 55 of the ACA) applies solely to international commercial arbitration, in addition to other provisions of the ACA. The ACA also embodies the UNCITRAL Arbitration and Conciliation Rules and the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.
In 2006, the Austrian law governing arbitration was largely aligned with the provisions of the UNCITRAL Model Law; it applies equally to international and domestic arbitration as well as to commercial and non-commercial matters. Hence, Austria can be considered a “Model Law Country”.
As noted above Law 2735/1999 incorporated into the Greek legal system the UNCITRAL Model Law, only with minor deviations. Amongst others:
(a) Under article 16 para. 3 L. 2735/1999 in case the arbitral tribunal decides on its own jurisdiction by virtue of a preliminary ruling, the parties are not allowed to bring a separate challenge against it before State Courts. It is deemed an integral part of the final award on the merits and may only be challenged as such only once the award is rendered (by virtue of a request for setting it aside).
(b) Article 15 L. 2735/1999 provides that in case a replacement arbitrator is appointed, absent an agreement by the parties, the arbitral tribunal may by virtue of a unanimous decision decide that arbitral proceedings will resume from the point of interruption.
(c) Article 17 para. 2 L. 2735/1999 provides that the interim or conservative measures granted by the arbitral tribunal shall be imposed – enforced by a decision of the competent One - Member Court of First Instance following petition of the interested party. Para. 3 of the same article provides that said enforcement decision may be revoked or amended by a decision issued by the same State Court.
(d) Article 33 L. 2735/1999 does not provide for an additional award as to claims made before the arbitral tribunal but not decided.
(e) Article 7 L. 2735/1999 introduces certain provisions unknown to Model Law pertaining to the formal validity of the arbitration agreements. A short reference to them is made further below under Question 7.
Further to the above, it has been argued in legal literature that certain differentiations in the (Greek) language of individual provisions of L. 2735/1999 may reflect also differentiations on the merits. We find this approach far-fetched. Absent a clear indication to the contrary based on the drafting history, mere translation questions shall not be elevated to legal ones.
The FAA pre-dates and is not based on the UNCITRAL Model Law on International Commercial Arbitration (the “Model Law”). The FAA differs from the Model Law with respect to the procedures for appointment of arbitrators, the power of arbitrators to rule on their own jurisdiction, the power of the courts to modify or correct an award, and the grounds for setting aside an award, among other issues. In general, the Model Law provides more detailed and numerous procedures for arbitration, such as the availability of provisional relief and the procedures to be followed in an event of a party default, whereas the FAA leaves much of this to be filled in by the parties’ arbitration agreement and selected arbitration rules. Despite these differences, U.S. courts have interpreted the FAA’s provisions in a manner that by and large is consistent with the Model Law. In addition, many state-level arbitration statutes, such as the Texas Arbitration Act, are based on the Model Law.
Both local arbitrations and international arbitrations in Israel are regulated by the Arbitration Law, except if otherwise agreed by the parties. Israel has not yet adopted the UNCITRAL Model Law on International Commercial Arbitration, and there are substantial differences between the Arbitration Law and the UNCITRAL Model Law, including with respect to the arbitrator's power to determine as to its own jurisdiction, the arbitrator's power to render temporary reliefs, the arbitrator's duty to provide a disclosure of any potential conflict of interest and more (some of these duties have been complemented by legal precedents that were rendered by the Israeli courts over the years).
The UNCITRAL Model Law has not been adopted in England and Wales but it has influenced the 1996 Act. Some significant differences relate to arbitrability, separability, competence of the arbitral tribunal to rule on its own jurisdiction and judicial intervention (including appeals on a point of law).
Romania does not have a UNCITRAL Model Law-based legislation; however, the institutions within the newly enacted legislation follow the lines and spirit of UNCITRAL Model Law, but a specific analysis of each provision would have to be performed in order to determine the exact influence of the Model Law.
The International Arbitration Law and the relevant provisions of the Code of Civil Procedure (both as “Local Law”) are substantially based on the UNCITRAL Model Law (“Model Law”). The significant differences between the Local Law and the Model Law can be explained as below:
- According to the Local Law, the award shall be rendered within one year as of the appointment of the sole arbitrator; or, in case of the arbitrators are more than one, as of the first meeting minutes of the arbitral tribunal, unless otherwise agreed by the parties. This one year time period, can be extended with the mutual agreement of the parties or by the civil court once one of the parties apply on.
- Although the Model Law states the arbitral tribunal shall apply the law which it determines to be appropriate unless the parties do not designate the law; the International Arbitration Law states that, the validity of the arbitration agreement shall be considered according to Turkish Law unless the parties designate the law to be applied to the arbitration agreement.