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ΑρχικήEnglish EditionThe difference between domestic and international arbitration

The difference between domestic and international arbitration


By Anastasios-Fotios Tsochatzidis,

As already mentioned in a previous article, Alternative Dispute Resolution, also known as ADR is a way to settle disputes without litigation. There are many forms of ADR worldwide such as conciliation, mediation, arbitration and neutral evaluation, but the most common in Greece are arbitration and mediation. In this article, arbitration will be examined more deeply, as there are great differences between domestic and international arbitration according to Greek legislation and it is interesting not only to examine them, but also to have a closer look on the procedure of international commercial arbitration.

To begin with, arbitration should be distinguished between the two aforementioned categories: domestic and international. Domestic arbitration is governed by articles 867-903 of the Code of Civil Procedure (CCP), whereas international commercial arbitration that takes place in Greece is governed by law 2735/1999. The basic difference between the two is the following: in domestic arbitration there is no element of foreignness and the dispute falls within the internal jurisdiction of the Greek courts. On the other hand, a dispute falls into international arbitration governed by law 2735/1999 when it has an element of foreignness. Whether or not a case would fall within the jurisdiction of the Greek courts would have arisen from the application of the relevant provisions of international procedural law. Therefore, international arbitration takes place when the dispute under the jurisdiction of the arbitral tribunal arises from a private international legal relationship. As regards the aforementioned law 2735/1999 it is noteworthy to add that it is a special, independent and autonomous form of legislation which contains 38 articles and applies in parallel to the articles 867 to 903 Code of Civil Procedure. The provisions of this law apply to international commercial arbitration, provided that it takes place in the Greek territory. The only exception to this are articles 8, 9 and 36 of the same law, which have a general application, which means that they are applied by Greek courts in any case when they are called to judge a dispute, even if the arbitration was set to take place outside the Greek territory. (Art1 par1).

It is also vital to mention that law 2735/1999 integrates the provisions of the UNCITRAL Model Law, which is a model law prepared by UNCITRAL, and adopted by the United Nations Commission on International Trade Law on 21 June 1985 and since then has been the basis for similar legislation in many other countries around the world. Nevertheless, what is the procedure that the arbitral tribunal follows when judging a dispute?

Initially, the arbitrators examine the arbitration agreement, which is typically a clause in a broader contract. In this clause two or more parties agree to settle out of court, through arbitration cases, any dispute that arises between them. In other words, the arbitration agreement is a tool that the parties use in order to bring their dispute before the arbitral tribunal. It is important to underline that when the parties choose to add this clause in a contract not only they submit to the jurisdiction of the arbitral tribunal, but at the same time they choose to be excluded from the jurisdiction of state courts. However, this arbitration agreement is not always legally valid and therefore the first duty of an arbitral tribunal is to reach a conclusion whether there is a valid agreement or not. (Art16 of 2735/1999 and Art.23.1 Arbitration Rules of the London Court of International Arbitration). This decision of the arbitrators is crucial for the arbitral tribunal in order to decide if it has jurisdiction to judge a dispute.

This whole “first examination” of the jurisdiction of the arbitral tribunal is also known as “Competence-Competence principle”, a fundamental principle of the modern law of arbitration. Its meaning is that an arbitral tribunal is competent to decide its own competence (Jurisdiction). That principle demands, in turn, that the arbitral tribunal, and not the court, should in the first instance decide the former’s competence. Nevertheless, if the arbitral tribunal falsely decide about the validation of the arbitration agreement, there is the possibility to bring the case before state judges. (Art34 of law). More specifically, after the arbitral tribunal issues an award, the parties have the right -if certain prerequisites have been met- to assert the annulment of this arbitral award by a state court, which in  the case of Greece is the Court of Appeal of the region, in which the arbitral award has been issued. (Art.6.2 2735/1999). Nonetheless, it is vital to mention that when the award of the arbitral tribunal is issued, it is binding upon the parties, produces res judicata effect and is also immediately enforceable (Art 904 Code of Civil Procedure). That means that if the Court of Appeal does not annul the arbitral award, all these aforementioned effects remain in force.

In conclusion, domestic and international arbitration have some differences concerning their regulation and their provisions. However, both forms of arbitration serve the same purpose, which is to settle disputes without litigation. Also, both forms judge the dispute by issuing a legally binding award, which is immediately enforceable.


References

  • Law 2735/1999 International Commercial Arbitration. Available here
  • Code of Civil Procedure (CCP)
  • Kalavros, International Commercial Arbitration, 2019 Sakkoulas

 

TA ΤΕΛΕΥΤΑΙΑ ΑΡΘΡΑ

Anastasios - Fotios Tsochatzidis
He comes from Serres and he is an undergraduate student in the 4th year of his studies at the Law School of the Aristotle University of Thessaloniki. He has great experience from scientific conferences of legal interest, simulations of international organizations, Erasmus+ student exchanges and voluntary actions. His favorite topics are issues around commercial and EU law. He speaks English and French. He loves travelling, reading books and swimming.