International businesses have grown with time and as observed in the recent past, companies and organizations formulate binding treaties that provide equal platforms for operation. Global business is complex in its nature and therefore necessitates growth of arbitration treaties. In every conflict, businesses resort to the use of Arbitration processes and the role played by an impartial person in is considered vital. With various conflicts emerging in business environments the need to establish arbitration centers ICDR (International Centre for Dispute Resolution) increase. ICDR was established by AAA to help deal with disputes across international market. Most of the institutes engaging in arbitration have developed their rules to favor the international platform.
The arbitral institutes have developed laws that are considered favorable by member states thus making the interpretation roles of local courts to be unnecessary. Companies always tend to subscribe to arbitral institutions that have a reputable history(1). Some institutions conducting arbitration processes that this document will highlight are the ECT, the ICC and the ICSID(2). Among the three institutions, ECT is considered the most appropriate conflict resolution method since the rules provide the parties with an opportunity to reach a general consensus without being subjected to state laws or any other subsidiary laws that might be strict and compelling(3). On the same note, ECT allows the conflicting parties to obtain justice beyond their jurisdictional boundaries. This aspect is one sure way of providing justice to in a more controlled way and without depending on the perceived home advantage(4). This paper analyzes the main differences observed while applying ECT, ICSID and ICC in arbitration processes.
Energy Charter Treaty
ECT was established to deal with matters relating to international natural energy and trade investments. ECT originated from international laws that link to efficient use as well as distribution of energy. Originally, ECT was established by a group of countries in Europe to provide protection to natural sources of energy(5). As observed, Article 19 of the energy charter contains important elements and describes the role states organs and the general public have towards protecting the environment. ECT was negotiated in 1990 by two parties: the western part of Europe and other developed nations on one hand and the eastern part of Europe majorly former USSR members. The main aims of the charter were to offer equal opportunity for trade and improve investments in energy markets across Eastern Europe. In early December 1991, ECT was signed and adopted as a complete law by 47 nations in The Hague. After 3 years, ECT was left open for negotiating nations to take an active role and agree on steps to develop concerning clean energy, hydrocarbons and nuclear energy. However, following the restrictions within the charter, USA and Canada started showing disinterest and opted to formulate more flexible policies(6). Following the decisions of the superpower, other countries like New Zealand decided to move out of negotiations and operate under its own statutory. Such steps left Australia and Japan as the only non-European countries in the negotiation board for implementation of ECT. The treaty has since been opened up for signing from 17 December 1994. ECT is considered an improved treaty since it follows the protocols of sustainable and efficient use of energy and other environmental resources.
Differences between ECT, ICC and ICSID
Contrary to ICC and ICSID, ECT among has been used to solve international commercial disputes in the past. Under the premises of ECT, arbitration is considered an adjudication process treated and operated in private as opposed to the other two conflict resolution methods where adjudication process can be conducted in relation to existing regulations(7). As an arbitration process, ECT allows the conflicting persons to decide on the best method of solving their problems outside the judicial boundaries. In most instances an arbitration will lead to a verdict that is final and can stand in the national court of law. Individual engaging in dispute will be given a chance to choose the arbitrators and the venue. In other words, the conflicting persons are expected to make good decisions based on the provided arbitration rules. Most importantly, arbitration rules offer the ability to control each participant’s language throughout the processes.
Most businesses that have undergone through the arbitration process under ECT recognize the method as always flexible and tailored towards meeting the needs of the conflict and not fulfilling personal interests. The arbitration process only becomes complete if the parties are fully convinced over the needs to remain united throughout their operations. Thus, through ECT, the arbitration needs are fully satisfied and the parties are in a position to maintain their initial relationships and terms of operation(8). As already mentioned, the world’s stance as far as the use of energy is concerned can only be regulated by the international commercial arbitration which is today more common than other arbitration methods. Such significance can only be elaborated when we focus on a case study such as the Liblanco Holdings vs. Turkey.
There are important features that make ICC more distinct from ECT and at least more outstanding than other arbitration institutions. Essentially, ICC takes an important step in influencing conflicting individual through rewards(9). The reward processes is fully monitored and scrutinized by the court performing the arbitration process. ICC does not offer declaration to subscribers unless the basis and genesis of conflicts are investigated and properly determined by the court. In such a case, the court is not only a participant but also a foreseer of the arbitration process from its initial stage to the completion(10). As much as the court might be lacking the necessary power to create an alteration in the award, the court still retains its credentials and at the implementation stage, the arbitrators have the right to consult with the court for any legal opinion concerning the resolution process. The general knowledge is that at times the court might find the objected proceedings flawed and bias. In such a case, the court puts in place counteractive measures to ensure that both parties involved in the conflict have equal platform to raise their areas of concerns.
The second distinct characteristic is the fact that prior to an arbitration process, each party is required to complete a reference form. Elements contained within the reference form include names of conflicting parties, level of dispute, arbitration rules one should follow, arbitration place and other additional information like process scheduling and recovery strategies. This elements area only obtained in ICC charter and not in ECT. Similarly, ECT gives opportunity for the parties to make agreements and solve their conflict with minimal supervision of a legal authority while ICC is encrypted under complete involvement of a law enforcing authority and decisions of the conflicting parties is pre-researched, determined and controlled by a legal authority(11).
ICSID arbitrates disagreements among states and nations. Development of ICSID followed the 1965 treaty which was under the sponsorship of World Bank(12). The initial name of the treaty was Washington Convection and contrary to the mentioned treaties, Washington Convection was to provide a neutral ground for conflict resolution between states(13). This meant that ICSID served as an autonomous institution that linked the falling relationships among states and nations by considering the grievances presented by such countries. Major distinction here level of involvement. While both ECT and ICC looks into the interests of individuals, businesses and companies, ICSID considers the needs to bring into terms conflicting nations and states(14).
Libananco Holdings Co. Ltd verses Turkey Arbitration Case
In order to elaborate how ICSID deals with disputes, this document shall consider the Libananco Holdings Co. Ltd verses Turkey Case(15).
On December 12, 2012, a company known as Libananco Holdings filed a case with the ICSID for the annulment of an arbitral award issued on September 2, 2011. After an ad hoc committee had been formed, a request for provisional measures was filed by the applicant on March 14, 2012. On 23rd March 2012, the arbitration committee invited Turkey to submit its observations and grievances(16). This was followed by a response form the applicant and finally a proper rejoinder form Turkey. During the first hearing on the April 11, 2012, the two factions made their oral submissions which were recorded and transcribed.
Case proceedings and each party’s submissions
In the case proceedings, the applicant provoked Rule 39 of the arbitration processes and provisionally requested the arbitration committee to strictly follow some cited cases relevant to the mentioned issues(17). In addition, the applicant gave reference to Rule 53, which stated that the rules of annulment of any arbitration procedure shall apply. Contrary to this the respondent observed the need for applicant to call for case annulment(18).
On the other part Turkey cited article 52(4) as was relevant in building a proper convention. Therefore using section 47 of the article appeared irrelevant towards tackling contagious issues raised by each party as claimed by the applicant. The support obtained from lex specialis denies the arbitration committee powers to reinstate the enforcement policies.
Applicants in this case responded by stating that executing article 52 does not comply to the provisions of article 44. According to Libananco Holdings, article 44 provides the arbitration committee with the power to follow rules regarding the proceedings of the arbitration and even decisions on whether to proceed further while awaiting publication of award. The applicant further argued that according to article 32 [Reply, para] it would have been absurd procedurally and substantively that the ad hoc had no power to call for annulment before the court outcome, while the ICSID tribunal was able to order certain behavior pending outcome(19). To counteract ICSID tribunal the respondent argued that Section IV of article 52(4) excluded major stipulations of article 47. They said that according to article 52 the ad hoc had totally no power to call for an interim course of action.
Verdict based on the submission
The arbitration committee agreed that article 52(4) excluded the action plan within article 47. The arbitration committee also acknowledged lack of power to call for further proceedings as stipulated by article 52. The arbitration committee also raised doubt as to whether the provisions of article 44 could have given the mandate to call for an interim process(20). The committee considered whether their competence to call for further proceeding would justify their action.
The committee concluded that without any proof that the respondents act would interfere with the rights of the applicants, then there was no reason for determining whether the committee had power to call for further proceedings or not, and since such claims would not create any change the committee had to dismiss the request while reserving its earlier decision on costs(21).
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