The UNCITRAL Model Law on International Commercial Arbitration ("Model Law") was first published in 1985 and amended in 1996. The agency for future development and promotion of the Model Law is UNCITRAL (United Nations Commission on International Trade Law).

The Model Law is a comprehensive code for arbitration with a special focus on international commercial arbitration.

The goal is to have individual states adopt the Model Law internally and the treaty is drafted accordingly.

All major commercial and trading states have signed on to the first edition of the Model Law (1985) (Canada was one of the first to do so, in 1986, though they had been one of the last to sign onto the 1958 New York Convention - which they also signed in 1986).

The most important feature of the Model Law is the aspect of the reciprocal registration and enforcement of awards rendered puruant to it. In this way, once an arbitration award has been rendered in one country, the res judicata follows the parties anywhere in the world and it is enforceable in any state that has signed onto the Model Law - thus hindering those who wish to frustrate an award against them.

UNCITRALBut regardless as to whether their state of citizenship, or which houses the corporation, has signed onto the Model Law, many participant in international trade agreements agree in writing to be contractually bound to the provisions of the Model Law by an arbitration agreement or arbitration clause which refers to it.

For example:

"Any dispute which might arise from or in relation to this contract, if not settled by negotiations, shall be settled by arbitration in accordance with UNCITRAL arbitration rules presently in force."

The law courts in many states will enforce such a contract between two parties regardless as to whether or not the state of either contracting party has formally accepted the UNCITRAL Model Law.

Thus, the UNCITRAL Model Law has had much success in international trade given that it is promoted not only by the United Nations towards its member states but also by individuals and corporations who seek the many benefits of arbitration in the resolution of their disputes, and who so provide in their contract as an arbitration clause, or who may otherwise have a full arbitration agreement.

The Model Law is stated to apply only to international commercial arbitration.

Commercial is described as, but not limited to:

"... any trade transaction for the supply or exchange of goods or services; distribution agreement; commercial representation or agency; factoring; leasing; construction of works; consulting; engineering; licensing; investment; financing; ranking; insurance; exploitation agreement or concession; joint venture and other forms of industrial or business cooperation; carriage of goods or passengers by air, sea, rail or wrote."

If the relationship is commercial, the Model Law would apply if the parties have their places of business in different states, if the selected venue of arbitration is in a different state, or a substantial part of the obligations under the primary contract are to be performed in a foreign country.

UNCITRAL's Model Law requires the arbitration agreement to be in writing.

There is a Scott v Avery provision in the Model Law at §8:

"A court before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so requests not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration unless it finds that the agreement is null and void, inoperative or incapable of being performed."

Other  essential provisions of the Model Law:

  • Unless the parties provide otherwise, the number of arbitrators is three; this, so they can determine issues based on a majority of them (§29)
  • Once constituted, the arbitrators acting together are called an arbitral tribunal;
  • The arbitral tribunal has the power to make preliminary, interlocutory or interim orders as between the parties;
  • The arbitral tribunal will consider any application that one of the parties to the arbitration provide security;
  • "The parties shall be treated with equality and each party shall be given a full opportunity of presenting his case" (§18);
  • "The parties are free to agree on the place of arbitration. Failing ... agreement, the place of arbitration shall be determined by the arbitral tribunal having regard to the circumstances of the case, including the convenience of the parties" (§20(1));
  • Provision is made for the exchange of statements of claim and of defense (§23) as well as choice of language (§22);
  • "The arbitral tribunal shall decide whether to hold oral hearings for the presentation of evidence or for oral argument, or whether the proceedings shall be conducted on the basis of documents and other materials" (§24);
  • "The arbitral tribunal shall decide the dispute in accordance with such rules of law as are chosen by the parties as applicable to the substance of the dispute" (§28(1));
  • "The award shall be made in writing and shall be signed by the arbitrators (§31);
  • The grounds for setting aside an award are very limited and are set out at §34. For example, evidence would be required that the arbitration agreement or arbitration clause was not legally binding, void or invalid; that there had been improper notice of arbitration; or that the award exceeded the scope of arbitration; and
  • Awards are stated to be binding and, upon written registration, enforceable by the court (§35).

The French name for the Model Law is Loi-type de la CNUDCI sur l'arbitrage commercial international.

REFERENCES:

  • Branson, C., "A View From The Centre" 51 Advocate 701 (1993)
  • Casey, J. B., International and Domestic Commercial Arbitraton (Toronto: Carswell, 1997).
  • Duhaime, Lloyd, ADR - A Glossary Of Terms
  • McEwan, K,, Commercial Arbitation in Canada - A Guide to Domestic and International Arbitration (Toronto: Canada Law Book, 2004).
  • UNCITRAL.org