The answer to this question is ‘yes’ despite the general principle that decisions made in the dispute settlement process through arbitration are considered final and should not undergo any substantive revision. Arbitration proceedings all over the world are based on this principle and this is enshrined in all international documents. However, as with all general principles of law, action can be governed by limited exceptions, such as in the case of annulment.
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The term "arbitration" refers to the settlement of disputes as arbitrators appointed in each individual case (arbitration ad hoc) and permanent arbitration bodies. The main thing is that the agreement between the conflicting parties should contain a clause on arbitration in case of disagreement.
When can the tribunal decision be overturned?
If you intend to start arbitration in the EU or the USA, please note that in general, the process for considering a case by the International Center for the Settlement of Commercial Disputes and other arbitration tribunals are very similar. However, the mechanism for annulling an arbitral award differs much.
A feature of the arbitral award is that it entered into force from the moment it was rendered. When arbitration is held outside the ICSID Convention, then national courts have the right to overturn decisions for the procedural grounds. For example, the party was not notified about the meeting on time or there was no arbitration clause in the contract, or
the arbitral award is contrary to public policy.
Quite often, when formulating the text of the arbitration agreement, the parties make mistakes in the name of the arbitration forum, its location, or indicate information that is clearly insufficient to reliably identify the arbitration institution competent to consider the dispute.
Errors like these, whether intentional or not, can be grounds for overturning the arbitral tribunal's decision.
The decision of international arbitration cannot be appealed on its merits. It can be canceled only in connection with gross violations of the procedure when making an arbitration award.
As for The ICSID Tribunals, its decisions cannot be reversed, they can only be canceled. Next, we will analyze what exceptional reasons may serve for the fact that the decision will be canceled.
When annulment is possible
Either party may file an application for the award annulment on any of the following reasons:
- the tribunal was not properly drawn up. It is worth noting that this ground is seldom used as procedural irregularities are closely monitored by the ICSID;
- the tribunal has clearly exceeded its powers in the process of resolving a dispute through arbitration in the EU or other countries;
- corruption by a tribunal member;
- deviation from the fundamental procedure. In this case, the violated rule should concern the right of impartiality of the arbitration court, equality of parties, rules for handling evidence and the burden of proof;
- the tribunal was unable to give reasons for its decision.
Final word
Annulment is an extraordinary remedy and is quite rarely used. It is applied in exceptional cases and in such a way as not to run counter to the key principle of arbitral awards, which is expressed in their ultimate finality.
If you are faced with a situation where you need to resolve a financial dispute in the USA, EU, or Asia, please contact our specialists for advice on starting an arbitration. To sign up for consulting, fill out the special form below, or use the contact information on the website.
