What is arbitration and how it works?
Arbitration is an alternative way of resolution of disputes between parties. Arbitration is an instrument or mechanism in the process of resolving a dispute which is acceptable to the parties and which has the legal authority to resolve the dispute by issuing a legally binding decision on the parties. resolving a dispute which is acceptable to the parties and which has the legal authority to resolve the dispute by issuing a legally binding decision on the parties. Arbitration is a possibility of resolving a dispute that ensures a fair and impartial solution.
Arbitration in its basic form is the resolution of the dispute based on agreement or contract between both parties in the dispute. Parties choose one or more people to hear their claims and to examine the evidences in a relatively informal environment. They agree on the procedure to be followed and the decision taken at the end of the process is final and binding. In many cases, the arbitrator chosen because of his knowledge and experience in field of dispute. In arbitration, the parties at odds submit their disputes to a neutral arbitrator, which weighs and evaluates the presented evidences and issues a final and binding decision. përfundimtar dhe detyrues.
The rapid economic development, technologic in global level, has enabled international trade relations to walk with a highly dynamic trend towards this fact to increase the number of international business transactions of sale and other commercial services. With this level of development, the number of trade disputes or conflicts which are usually foreign element is growing day by day, which seek quick and efficient solutions to these disagreements and disputes of distributive justice ways is arbitration.
Taking into consideration the arbitration takes place in accordance with the principles of natural law his procedure may be amended by the parties to better suit the size and complexity of their disagreement. A small case, for example, can be judged based only on the submitted documents, which can significantly reduce the cost. Other more complex cases may require more judicial hearing style, at which presented the formal requirements of the requesting party and the defense, the evidence presented by each side and then becomes the question of witnesses.
Functioning and importance of arbitration as high value for the resolution of commercial disputes in the Republic of Kosovo is estimated with a tremendous importance for the recovery of the economy through a business awareness that their resolutions of disputes are made through arbitration determined by the law of Kosovo Arbitration. Arbitration in the Republic of Kosovo is not an innovation because such a regulation existed earlier, but now is in function because it is regulated by the Law on arbitration in Kosovo where are detailed all actions of resolving commercial disputes through arbitration.
Between arbitration and court differences do exist in terms of strengths and weaknesses:
The Advantages of Arbitration
Advantages of arbitration include: advantages in costs and time efficiency, confidentiality, neutrality, predictability and final nature of the decision these are some of the perceived advantages of arbitration. However a large number of multinational corporations consider the flexibility of possibility to adapt specific arbitration needs and circumstances as the highest priority of arbitration.
During the trial proceedings arbitration has its advantages, such as:
1. The willingness autonomy of businesses entities
This contract as a rule determines the formation and work of arbitration understood in terms of procedure, respectively the way of resolving the dispute. Settlement of disputes that arise from international trade agreements in principle implies the participation of parties from different state which has the effect that one of these to be deferred by the procedure in the state where the right of which led to the language which is foreign for the parties.
2.So the parties’ autonomy will enable them to avoid the
the competence of state courts and apply substantive law which was not recognized to avoid prejudice to the partiality of any national judicial system. The autonomy of the parties will enable them to choose the place where the arbitration will be hold, be trusted dispute resolution, the set of procedural rights and rules that will apply during the arbitration proceedings, and to appoint competent substantive law in accordance with which the arbitrators are obliged to solve it.
3.With the acceptance and the execution of foreign arbitral decision is significantly easier enforcement require of the foreign court.
Therefore 136 states have signed and ratified the New York Convention of 1958, and are obliged to recognize and enforce decisions of the arbitration to which this Convention applies.
4.Regarding the states, institutions and state agencies
which in principle enjoy judicial immunity, arbitration is the best way that party of private law comes to the possibility that for its dispute with the state to decide with the neutral institution, and based in impartially rule.
5.In the end, this should be always added with increased tendency of accentuated emancipation of international commercial arbitration by different national legal systems and the formation of an autonomous legal system "Transnational", which by its part, significantly contributes to the promotion, creation and application of specific international trade law or business law (lex Mercator).
1.The main weakness of the settlement of disputes by arbitration, the limited authorization of the court of arbitration which find to their base in the arbitration agreement and according to the rule are not able to exceed the context of the arbitration agreement. Arbitration is not possible to apply the tools of violence during the procedures, to order the violent behavior of witnesses or experts, to determine temporary or preliminary measures in order to meet the requirements of the creditor. In these relationships arbitration is guided in state courts.
Considered weaknesses arbitration manifested in possibility relations in participation of
third parties in arbitration proceeding and to those who are not related to the arbitration agreement.
We can say that arbitration is not able to order the joiner of disputes as does the state court, nor allow participation of intervener in the arbitration proceeding.
In the most important disputes which filed in the arbitration such as investment affairs, the perpetrator who has entered the main contract with an arbitration clause usually entrusts the parts of work performance to the subcontractors, he must undertake arbitration proceedings against the main contractor which again has the opportunity to develop or take special disputes against those persons who are directly entrusted to perform works.
This would not be the case in state court proceeding at which the situation
will be resolved with the contentious institute that allows under certain conditions, more people to sue, be sued respectively in the same suit.
This would not be the case in state court proceeding at which the situation will be resolved with contestation institute that allows under certain conditions, to suing more people, to be sued respectively in the same suit.
Weaknesses and potential concerns vary depending on the corporate arbitration, transaction and litigation.
Moreover, while some features of arbitration considered a priority by several corporations, (e.g. final decision without the possibility of complaint) several other corporations see these as an obstacle.
Our case will decide arbitrator or panel of arbitrators, so the appointment of the same or similar is very important, since the selection of the arbitrator or well arbitrators depends on the genuine flow.
Arbitration Law in Kosovo Article 9, allows the parties to decide on the naming of an arbitrator or arbitrators body. So in context are free to determine the number of arbitrators in their Arbitration Agreement, or later in writing. If the parties fail to agree on the number of arbitrators in their arbitration agreement, or later writing, the center will designate a single arbitrator from the list of arbitrators. Named authority of which refer to these rules is the center, parties can follow named procedure as defined in their arbitration agreement, or as may agree later in writing. Denomination of Arbitrator under the Law on Arbitration of Kosovo is foreseen that the conditions for the naming of an arbitrator or arbitrators body are: to be independent, to be impartial, to be efficient, and have professional experience in arbitration.
Also the parties may request the disqualification of an arbitrator or arbitrator body request for removal of arbitrators from the process when: with a person discussed in connection with a possibility of naming him as an arbitrator, he must make known any circumstance that can wind up justified suspicions for his impartiality or independence. An arbitrator, from the named time and during the process of arbitration, should without delay make known to the parties any similar circumstance, if they are not already aware of it for them.
To an arbitrator may apply for removal from the process only if any circumstances exist that raise justified doubts for impartiality of his independence, or if he does not possess qualifications agreed to by the parties.
A party may request removal from the process of an arbitrator named by him, or in the denomination, of which he has participated, only for reasons for which he was made aware of after the denomination. The UNCITRAL Model Law anticipates that if the main arbitrator is replaced, all sessions must be repeated, and if another member of the tribunal replaced then it will recur or not should be decided by the arbitral tribunal.
The arbitration Law has access to the "loser pays" by requiring the losing party to cover all costs unless the parties have agreed otherwise.
The Law for contested procedure provides that the arbitrator has the right to be compensated for his services and that the parties will share costs equitably. Body of arbitrators, in its final decision, shall appoint the arbitration costs, the costs of arbitration proceedings include:
a.)Arbitrators fees to be determined specifically for the arbitrator shall be appointed by the Arbitrators own body in accordance with Tariff Table Arbitration Tribunal,
b.)Travel expenses and other expenses incurred by the arbitrators
c.)The fees of experts and other assistance required by the body of Arbitrators;
d.)Travel expenses and other expenses of witnesses, to the extent that these expenses are approved by the body of Arbitrators
e.)Fees legal representation and assistance winning party, if such costs are required during the arbitration proceedings and only for a limited amount of these costs that body of Arbitrators will determine that it is reasonable
Who Pays the Costs?
The costs of arbitration, in principle, will get covered by the losing party. However, the body of Arbitrators could divide each of these costs between the parties if it determines that this separation is reasonable, taking into account the circumstances of the case.
When the body of Arbitrators issued an order for the termination of the arbitration proceedings, or takes a decision that is agreed terms,
he will determine the expenses attributable to arbitration, in the text of this order or decision.
Deposition of Expenditure
Body of Arbitrators, with its formation, may require each party to deposit an equal amount as an advance for the costs of arbitration proceedings. During the course of the arbitration proceedings, Body of Arbitrators may require supplementary deposit by the parties.
If the required deposits are not paid in full within a prescribed time after receiving the request, the Body of Arbitrators shall inform the parties in order that one or the other be able to make the required payment. If this payment is not made, the Body of Arbitrators may order suspending or termination of the arbitration proceedings.
Also the parties may request the disqualification of an arbitrator or arbitrator body request for removal of arbitrators from the process when: with a person discussed in connection with a possibility of naming him as an arbitrator, he must make known any circumstance that can wind up justified suspicions for his impartiality or independence. An arbitrator, from the named time and during the process of arbitration, should without delay make known to the parties any similar circumstance, if they are not already aware of it for them.
To an arbitrator may apply for removal from the process only if any circumstances exist that raise justified doubts for impartiality of his independence, or if he does not possess qualifications agreed to by the parties.
A party may request removal from the process of an arbitrator named by him, or in the denomination, of which he has participated, only for reasons for which he was made aware of after the denomination.
The UNCITRAL Model Law anticipates that if the main arbitrator is replaced, all sessions must be repeated, and if another member of the tribunal replaced then it will recur or not should be decided by the arbitral tribunal.
Literature used by
Hetemi J. Mehdi "Some current topics of Market Economy" Pristina, 2005
Economic chamber of Kosovo - materials used by OEK- 2010
Alexander GoldsteinInternational Commercial Arbitration, Zagreb, 1990
Rules of Commercial Arbitration Procedure, Albania.
Convention of New York for the acceptance and execution of foreign arbitration decision dated 10.06.1958
Law on Arbitration of Kosovo, no. 02/75 dated 26.01.2007
Model Law of UNCITRAL.
Msc. Dren Salihu, Lawyer
Prishtina, January, 2022
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