State Legal traditions and international commercial arbitration have continued to intersect over the years, and it is literally impossible for both to be separated, especially with the current state of events globally.
Most people are oblivious to how deep legal traditions and legal cultures control and influence international commerce. This confusion has sometimes led to shocks and surprises from disputing parties during arbitral hearings. This piece seeks to highlight this part of international commercial arbitration to help non-arbitrators understand why arbitrators and institution seats behave in certain patterns while upholding the global tenets of international arbitration as a dispute resolution mechanism.
What are Legal Traditions?
Understanding what legal tradition means is not very complicated, and this section will comprehensively highlight it and its processes.
Legal traditions are simply the short term for the legal laws, their sources, and models across different states. As such, the legal tradition of a particular country is simply its legal identity. The legal identity goes further than just the jurisdiction law and considers the entire practices that law enforcers are expected to uphold.
The biggest determinant of a state’s legal tradition is the type of laws that it practices. The two major laws that different states practice are generally categorized into Civil Law and Common Law.
Civil law is known for its emphasis on written laws and strictness in handling evidence. Many countries use the civil law system, making it one of the biggest institutionalized legal laws globally. Civil law countries include Spain, Germany, Netherlands, Portugal, Central and Eastern Europe, East Asian States and most South and the Central American States.
The biggest strength of civil law is its permanent structure. Since the laws under this special system are written, there must be concrete evidence determined by the law courts for legal judgements to be awarded.
Common law is a more flexible law system that gives judges much power to make statute-like decisions. As such, oral forms of evidence from disputing parties are generally accepted. This is not possible in the civil law system. Some of the countries that practice the common law system include Australia, Canada, Cyprus, England and Wales and the United States.
Civil and common laws tend to shape international commercial arbitration in a lot of ways, and the next section will highlight how this happens in detail.
How do Legal Traditions Affect International Commercial Arbitration?
In international commercial arbitration, the effect of states’ legal tradition affects its processes. In a utopia system, the International commercial arbitration dispute resolution mechanism is supposed to be independent and based purely on arbitral rules and institution seats. However, this is not the case in all totality. In fact, international commercial arbitration rules were drafted from a mix of civil law and common law. The system’s level of independence is that it serves as a symbolic law court for different nations that subscribe to its rules (The New York Convention 1958).
The major International commercial arbitration Institutions like the Permanent Court of Arbitration and International Court of Commerce ICC have their rules and status modernized from the law merchant rule used in earlier centuries for judging how states and merchant or business entities can work as business partners. The rules remain very relevant in determining international commercial arbitration rules.
However, there is no doubt that international commercial arbitration is relatively more complex today due to the exponential growth of economic relationships between countries. In today’s world, civil law and common law influence in international commercial arbitration have also become much more evident, pinpointing the influence of legal traditions in the system currently.
In fact, the relationship between distinct state legal traditions and international commercial arbitration has grown over the years, and the trend suggests that this will continue over time.
The impact of legal laws in international commercial arbitration is not just all good or all bad. The relationship has been in the balance. The next few sections will highlight how Different legal traditions have affected international commercial arbitration.
Legal Traditions Causes Delay in the Arbitral Processes
One of the major issues with legal traditions’ influence on international arbitration is that it slows the process of international commercial arbitration. For example, international arbitration processes carried on the back of the Civil law system are typically slower than that influenced by common law.
Legal Traditions Affect How International Commercial Arbitration Submission of Evidence is Carried Out
States with Civil laws usually require substantial and written documents for evidence. Common laws, on the other hand, accept an oral submission. However, in international arbitration, the civil law system guides most arbitral rules and institutions, and as such, oral evidence barely counts in international commercial arbitration.
The collection of evidence in international commercial arbitration requires a mix of civil and common law systems with more dependence on the former.
Legal Traditions Emphasizes The Power of International Commercial Arbitration
States have become more friendly with international commercial arbitration, and the laws available help enforce its award more often than it sets aside. Civil Law states have proven that they can work hand in hand with international commercial arbitration and enforce any decision made by a tribunal as long as all ethics and procedure are followed.
Conclusion
State laws and their legal traditions have significantly determined international commercial arbitration processes since their inception. State law influence is not so evident for non-expert arbitrators because of the choice of determining the law that structures how an arbitration process can be carried out.
While Investors should be concerned with the type of law in the state where award enforcement will be required, expert arbitral contracts can mitigate the risk of contract issues. This is why employing the services of expert arbitrators can be extremely helpful.
Rättsakuten is one of the best firms to get expert arbitrators with unrivaled experience in drafting favorable contracts that give their clients the edge. You can reach the company for all your inquiries and professional counsel.
About Rättsakuten
Rättsakuten is a leading law firm focused on Commercial Arbitration and Dispute Resolution. Based in Sweden, Rättsakuten handles dispute resolution and Arbitration matters before the SCC (Swedish Chamber of Commerce), ICC, HKIAC and several other Arbitration tribunals.