engleski

States and state-controlled corporations in international commercial arbitration

The modern tendency of the growing use of arbitration as an alternative to litigation in disputes between states and private parties (mixed arbitration) is due to two parallel developments: the greater use of arbitration as a preferred mode of dispute settlement in international business relations in general and an increased participation of states in international trade and investments. Arbitration in disputes with state parties primarily serves to protect private parties by enabling them to initiate arbitration proceedings without the risk of interference of the local courts of the state party. This enables the private party to avoid the application of the municipal law of the contracting state party and its sovereign power to make changes in its municipal law without the private party's consent. By signing an arbitration agreement, a state party has agreed to submit its future disputes with the other party to the agreement to an arbitral tribunal and not to the courts. However, considerations of subjective arbitrability of disputes involving states, i.e. state's sovereign immunity used as a defence against arbitration, recognition and execution of the award, may interfere with the conduct of the proceedings and their outcome. In cases where mere inclusion of an arbitration clause in a contract or the commencement of the proceedings does not itself lead to amicable settlement of the dispute, the effectiveness of mixed arbitration ultimately depends on the enforceability of the award. The unavoidable link with national legal systems at the execution stage of a provisional measure or the final award makes state immunity directly relevant. Another important factor in deciding on the issue of sovereign immunity is whether the state is directly or just indirectly involved in the arbitration, through a state-controlled corporation. In analysing the current issues of arbitration involving states and state-controlled corporations, the author first focuses on the relevant practice of mixed arbitration in the fields of international trade and international investment, from both industrialised and developing countries' perspective. She then tries to determine the difference between the involvement of state parties and state-controlled corporations in arbitration proceedings. In this respect, the author analyses cases in which the legal separation, normally existing between state-controlled corporations and states, has to be disregarded. In the following section the paper addresses the issue of sovereign immunity with regard to arbitration proceedings, enforcement and execution of ICSID (International Centre for the Settlement of Investment Disputes) and non-ICSID awards. The author finally examines the problem of determining the applicable law in the context of mixed international commercial arbitration.

international commercial arbitration; mixed arbitration; states and state-controlled corporations

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