The London Court of International Arbitration (LCIA) & the Arbitration Act 1996
England is the country, whose courts are involved in resolving both national and international disputes. The London Court of International Arbitration (LCIA) is the oldest arbitration tribunal established in 1892 that deals with all types of trade disputes. The legislation and judicial practice of the London Court of International Arbitration (LCIA) are of considerable interest because of the amount of accumulated practice in certain categories of cases.
The United Kingdom of Great Britain and Northern Ireland consists of four countries that in their union form a group of three jurisdictions: England and Wales, Scotland, and Northern Ireland, each of which has its own judicial system and a procedure for dealing with civil cases. English law is limited to the territory of England and Wales where the following laws are applicable: Reform Act 2005 (Constitutional Reform Act 2005); Supreme Court Act 1981; Arbitration Act 1996; The Arbitration Act (International Investment Disputes) 1966.
IQ Decision UK lawyers specialize in supporting complex commercial transactions and projects in the field of international dispute resolution. Our team of professional financial and legal consultants enjoys a high reputation among clients for providing innovative legal solutions in all major areas of international law. Our lawyers have lengthy expertise in arbitration process related to contract-based form of binding dispute resolutions through neutral international tribunals.
The general principle of determining the competence of international commercial arbitration by the agreement of the parties in English law is subject to restrictions due to the possible public nature of the dispute. Private law disputes are subject to consideration by international commercial arbitration only if there is an arbitration clause in the contract. Longer periods of consideration, a more complicated procedure for litigating trade disputes in English state courts have in recent years caused an increase in the number of applications by businessmen to international commercial arbitration.
An increase in the number of disputes under consideration prompts the use of faster procedures, such as expedited arbitration (fast-track arbitration). The creation and use of new information and communication tools, the widespread use of the Internet have made it necessary to create a special system to expedite the settlement of disputes – online proceedings, in which participants in the proceedings are virtually present at arbitration hearing. A draft law has already been drafted, and the procedure itself is applied at the Center for Effective Dispute Resolution (CEDR).
Until recently, the procedural theory of the legal nature of the arbitration agreement dominated the doctrine of England. Modern English lawyers increasingly note the advantage of the theory of the mixed legal nature of arbitration. English law, after England joined the European Union, begins to approach the European interpretation of the arbitration agreement, namely the mixed theory. The legal nature of international commercial arbitration is increasingly seen in England as a special sui generis legal institution. The complex and mixed theories developed by English jurisprudence are based on the assumption that arbitration is a contractual phenomenon in its essence, and procedural issues relate only to the sphere of its functioning.
IQ Decision UK International Arbitration Practice unites a team of lawyers with many years of experience in the field of international commercial and investment arbitration according to the regulations of the leading international arbitration institutions such as: UNCITRAL, the International Court of Arbitration (ICC), the London Court of International Arbitration (LCIA), the Arbitration Institute of the Stockholm Chamber of Commerce (SCC) and the International Center for Investment and Investment Disputes (ICSID).
The general trend in the relationship between the State and international commercial arbitration in England should be considered an increase in the controlling role of state courts. This role has substantially increased after the reform of the English judicial system via adopting the 2005 Law on Constitutional Reform. Currently, issues of competence of international commercial arbitration, as well as their compliance with the basic principles of civil justice, can be challenged in state courts. Modern English law considers the absence in the statutory law of a single act denoting the limits of authority of state courts in the evaluation of decisions made by international commercial arbitration as an unsolved problem that makes it difficult for state courts to fulfill their controlling role.
Lawyers of IQ Decision UK are familiar with all the nuances of arbitration process, thanks to the unique experience of participating in arbitration proceedings as representatives of the parties, arbitrators appointed by the party, sole arbitrators, chairmen of the arbitral tribunal, and as experts in the EU law.
Recently, international commercial arbitration has become the most popular alternative to state method of settling disputes in international trade, with great advantages over the state justice model. One of the significant statutes is the Arbitration Act 1996. The vast majority of national arbitration acts do not contain a list of rules that are considered imperative. However, the Arbitration Act 1996 has a list of rules that are mandatory to follow by the parties to arbitration process under the aforesaid Act.
The Arbitration Act 1996 also provides for the possibility to exclude the competence of the English court to consider a petition for reversal or reconsideration of an order in connection with an arbitration award on the grounds that the application of English law is irrelevant based on the previous agreement concluded between the parties to arbitration.
According to the Arbitration Act 1996, the agreement of the parties concluded before a dispute arises that all or part of the costs will be borne by one of the parties, regardless of the outcome of the arbitration is invalid.
The institution of arbitration, which is based on the freely expressed will of the parties, provides the contracting parties with a number of appropriate tools to ensure the greatest possible certainty as to the interpretation and outcome of their contractual relations in the event of a trade dispute.
Compared to ad hoc arbitrations, the role of permanent arbitration institutions has steadily increased in England recently. According to the latest data, 86% of all appeals in England fall on permanent international commercial arbitration and only 14% on ad hoc. There is also a close relationship between institutional arbitration and ad hoc arbitration. One of the manifestations of the interaction of these two different types of arbitration is the practice of promoting ad hoc arbitration by permanent arbitration centers.
The IQ Decision team of lawyers represented clients in arbitration proceedings with a wide range of issues, including: disputes in trade finance and lending, disputes related to international contractual rights and obligations, joint ventures, as well as disputes in the field of energy and natural resources, telecommunications and pharmaceuticals.
International commercial arbitration can be defined as a special alternative judicial method for resolving civil disputes arising from foreign economic activity and complicated by the “foreign element”; carried out on the basis of the voluntary will of the parties, taking into account the specifics of the bodies and the procedure for selecting the arbitrators authorized to consider these disputes; and recognized by the government of various countries in terms of recognition and enforcement of decisions on such disputes, which are final and binding on the parties.
Historically, in the area of trade (commercial) disputes in England for a long time the courts considered an agreement to refer a dispute to arbitration as an agreement that the parties can unilaterally withdraw from (the principle of “revocation”). The possibility of using this principle was due to the fact that the English Common Law laid down a provision on the inadmissibility of the voluntary refusal to appeal to the state court, since this contradicted the concept of public policy. On this basis, English common law did not recognize the binding nature of the arbitration agreement concluded by the parties.
Thus, initially, the decisions of the arbitration courts could not be enforced by state coercion and force. With the unwillingness of the aggrieved party to execute the arbitration decision voluntarily, the winning party did not have any other options to execute the decision, except to apply to initiate a new trial in the British state court. The provision on judicial unenforceability of arbitration agreements in accordance with common law reduced their effectiveness and negatively influenced the development of international trade relations in England.
Over time, the state gradually begins to intervene in regulating the activities of arbitration courts in England, first recognizing decisions and authorizing their execution, and then regulating to a greater or lesser extent various issues related to the arbitration of trade disputes.
The activities of England’s oldest commercial arbitration, the London Court of International Arbitration (LCIA), contributed greatly to the development of arbitration law in England and in the world.
Currently in England, the task is to reduce the number of appeals to the state courts. There is a special procedure in England whereby parties are encouraged to use international commercial arbitration. Recently, this procedure took the form of a formal recommendation.
The basis of the functioning of international commercial arbitration is the arbitration agreement of the disputing parties (clausula arbitriosa). An arbitration agreement is an agreement of the parties that all disputes arising or which may arise out of a contract are referred to international commercial arbitration. For consideration of a dispute by international commercial arbitration, reference in the contract or reference to another document containing the arbitration agreement is sufficient.
There are various classifications of types of arbitration agreement. An arbitration agreement may be concluded in the form of a clause in a contract called the arbitration clause, or in the form of a separate agreement, often referred to as an arbitration record.
The arbitration agreement must be submitted to international commercial arbitration in the form of an agreement, statement or any reference of the parties, providing for arbitration in accordance with the Rules of the chosen international commercial arbitration. For example, the preamble of the Rules of the London Court of International Arbitration explicitly stipulates this requirement “If any agreement, arbitration record or reservation provides for arbitration according to the Rules of the LCIA, it is considered that the parties agreed to arbitration proceedings in accordance with the current Rules and amendments to it, which entered into force before the commencement of the arbitration process.”
Lawyers from IQ Decision UK counsel clients on all aspects of international arbitration, developing the most optimal solutions taking into account the peculiarities of clients’ business.
We provide legal support at all stages of dispute resolution: from conducting pre-arbitral negotiations and agreeing arbitration clauses to enforcing final arbitral awards.
We are ready to respond promptly to customer requests and get involved at any stage of resolving the conflict. Our lawyers have tremendous experience in successfully settling disputes in the interests of clients in the early stages of resolving disputes.
For each client, we develop an individual procedural strategy, including arbitration and related litigation. We successfully cooperate with international and national law firms from other jurisdictions and coordinate multi-jurisdictional court proceedings, including those aimed at obtaining the satisfying remedies and enforcement of arbitral awards.