International arbitration and its exclusion from the Brussels regime

Author:Hamed Alavi - Tatsiana Khamichonak
Position:Candidate, Lecturer Tallinn Law School, Tallinn University of Technology, Estonia - Tallinn Law School, Tallinn University of Technology, Estonia
Pages:7-26
SUMMARY

The Brussels regime, which regulates the matters of transnational litigation excludes arbitration from its scope. Upon formation of the Brussels regime the existing instruments concerning arbitration - the United Nations Convention on Recognition and Enforcement of Foreign Arbitral Awards and the 1961 European Convention on International Commercial Arbitration - were believed to be sufficient.... (see full summary)

 
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STUDIES AND COMMENTS
International arbitration and its exclusion from the Brussels regime
Ph D. student Hamed ALAVI
1
Student Tatsiana KHAMICHONAK
2
Abstract
The Brussels regime, which regulates the matters of transnational litigation
excludes arbitration from its scope. Upon formation of the Brussels regime the existing
instruments concerning arbitration - the United Nations Conve ntion on Recognition and
Enforcement of Foreign Arbitral Awards and the 1961 European Convention on
International Commercial Arbitration - were believed to be sufficient. The original Brussels
Convention 1968 on recognition and enforcement of judgments delivered in the courts of
the EU Member States expressly provided for the exclusion of arbitration. The following
Brussels I Regulation
3
followed the trend and reinforced the exclusion of arbitration from
their material scopes. The rationale for doing so was primarily the prevention of parallel
proceedings and irreconcilable judgments. The arbitration exclusion from the Brussels
regime has caused a fair amount of confusion, especially regarding the extent and limits of
the exclusion. That is, whether the arbitration agreement, the arbitral award and its
consequences are covered b y the exclusion or they may fall under the scope of the Brussels
regulation if they constitute only an incidental question to the main cause of action?
4
The
confusion was illustrated in the ECJ judgment West Tankers
5
, which generated negative
feedback from the arbitration community and indicated the need for reform. The recently
adopted Recast Regulation
6
took it upon itself to clarify the relationship between
arbitration a nd the EU regime of transnational litigation. The exclusion is reinforced yet
again and its boundaries are specified in the Preamble. However, whether or not the
concerns about the extent and objectives of arbitration exclusion have b een at present
eliminated, remains to be seen.
Keywords: international arbitration, litigation, the EU law, Brussels regulation,
Brussels recast
JEL Classification: K11, K20, K30
1
Hamed Alavi - MBA. LLM. PhD. Candidate, Lecturer Tallinn Law Sch ool, Tallinn University of
Technology, Estonia, hamed.alavi@ttu.ee .
2
Tatsiana Khamichonak - Tallinn Law School, Tallinn University of Technology, Estonia,
tatsiana.khamichonak@hotmail.ee .
3
Regulation No 44/2001 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil
and Commercial Matters, OJ 2001 L 12 p.1.
4
Moses, M 2014, ‘Arbitration/Litigation Interface: The European Debate’, Northwestern Journal of
International Law & Business, vol. 35, no. 1, pp. 1-47.
5
Case C-185/07, Allianz Spa v. West Tankers, Inc., 2009 E.C.R. 1-00663.
6
Regulation 1215/2012 of the European Parliament and of the Council of 12 December 2012 on
jurisdiction and the recognition and enforcement of judgments in civil and commercial matters
(recast), OJ L351 p. 1.
Volume 6, Issue 1, June 2016 Juridical Tribune
8
1. Introduction
Arbitration is a method of dispute resolution, which relies on private
parties rather than the system of state courts: the parties, thus, grant powers to a
number of individuals to decide a dispute between them, effectively setting aside
the power of the courts and the national procedures, in as much, however, as the
extent of the law permits
7
. Arbitration is a popular form of dispute resolution
particularly in the environment of business to resolve issues that arise of the
dealings in trade. The popularity and wide reliance on arbitration flows from a
number of advantages arbitration claims, such as it being less costly and much
speedier that court litigation (which, in fact, might not be the case: depending on
the subject of a dispute and the expertise arbitrators are required to possess to be
qualified to tend to it, the costs escalate, especially in areas like computer
technologies; besides, the necessity for court measures at different stages of
arbitration process is likely to undermine its arguably swift nature)
8
, as well as
conservatism of state justice and its degree of immobility
9
.
The paper explores the inevitable relationship between arbitration and
litigation and arbitration’s place within the European legislative framework.
Particularly, it addresses the question of why the Brussels regime, which regulates
matters of transnational litigation in the EU, has consistently excluded arbitration
from under its scope. Besides the prima facie exclusion of arbitration and its
rationale, the concerns raised by the extent of the exclusion are addressed as well.
That is, whether the complementary to arbitration questions such as the validity of
an arbitration agreement and formation of an arbitration tribunal, among others, are
similarly excluded from the scope of the Brussels regime. The paper commences
with introductory comment and continues by outlining the nature of arbitration and
its distinctive features in Part II. Part III gives a detailed overview of the instances
of court involvement in the arbitration process, which often dictates the choice of
forum. Part IV discusses elaborates on the rationale for the exclusion of arbitration
from the Brussels regime. Finally, Part V concludes with an inquiry of whether the
confusion generated by the exclusion has been eliminated with the entry into force
of the Recast Brussels Regulation and whether a separate instrument regulating
arbitration in Europe is desired.
2 International arbitration: nature and key characteristics
2.1 Key features of international arbitration
The need to define the notion of international commercial arbitration was
not urgently felt until the adoption of the UNCITRAL Model Law on International
Commercial Arbitration
10
in 1985, which, although not legally binding, was meant
7
Palacean, C 2009, ‘Forms of arbitration in international trade’, Law Anna ls Titu Maiorescu
University, vol. 7, pp. 117 128.
8
Carr, I & Stone, P 2014, International Trade Law, 5th edn, Routledge, UK.
9
Palacean, C op. cit., p. 117.
10
UNCITRAL Model Law on International Commercial Arbitration (1958) with amendments as
adopted in 2006, available at the United Nations Commission on International Trade Law web-

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