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Party Impecuniosity and International Arbitration: The Interplay between Failure to Pay the Advance Costs and Validity of Arbitration Agreement in International Arbitration

Year 2020, Volume: 40 Issue: 1, 573 - 611, 30.06.2020

Abstract

The costs in international arbitration might be burdensome compared to the costs in litigation. The right to legal aid applies to almost none of the international arbitration proceedings. When an impecunious party fails to pay the advance on costs, it is very likely that the arbitrator(s) will suspend its work or even that may lead the relevant claims be considered as withdrawn. The problem emerges with the impecunious party which might be left without an arbitral forum and become deprived of its right to “access to justice” under Article 6 of the ECHR. The aim of this paper is to analyze how the balance between binding nature of arbitration agreement and impecunious party’s right to “access to justice” should be maintained in case of party impecuniosity in international arbitration. As a result of this analysis, it is worthwhile noting that mere proof of financial incapacity of a party failing to pay the costs of arbitration should not be sufficient to set aside an arbitration agreement in an international context. Exceptionally, the courts may allow continuation of court proceedings if the challenging party submits convincing evidence that the counterparty’s actions or behaviors have caused or largely contributed to its financial incapacity. The standard of proof to establish such link should be high, at least higher than prima facie standard exercised in review of enforceability of an arbitration agreement. The paper finally reviews alternative remedies that may promote access to arbitration.

Supporting Institution

The author declared that this study has received no financial support.

References

  • ‘2019 Managing Legal Risk Report: A Survey of CFOs and Finance Professionals’ <https:// burfordcapital.com/media/1266/managing-legal-risk-report-2019.pdf> accessed 10 November 2019
  • Abrams DS and Chen DL, ‘A Market for Justice: A First Empirical Look at Third Party Litigation Funding’ (2013) 15 University of Pennsylvania Journal of Business Law 1074
  • Altenkirch M and Frohloff J, ‘The Advance on Costs in Investment Arbitration’ 33 ICSID Review - Foreign Investment Law Journal 723
  • Alvarez HC, ‘Industrial Service & Machine Inc. Operating as McClean Anderson a Division of Industrial Service & Machine Inc. v. Resin Systems Inc. Operating as RS Technologies a Division of Resin Systems Inc., Alberta Court of Appeal, 0701-0343-AC, 10 March 2008’ Kluwer Law International
  • Arroyo M, ‘Chapter 17, Part II: Commentary on the ICC Rules, Article 37 [Advance to Cover the Costs of the Arbitration]’ in Manuel Arroyo (ed), Arbitration in Switzerland: The Practitioner’s Guide (Second Edition) (2nd edn, Kluwer Law International 2018)
  • Balkar Bozkurt S, ‘Milletlerarası Tahkimde Yargılama Masraflarının Hak Arama Özgürlüğüne Etkisi ve Sonuçları’ (2015) 10 Bahçeşehir Üniversitesi Hukuk Fakültesi Dergisi 121
  • Barysheva N and Chessa V, ‘Société Projet Garoubé Pilot c. International Chamber of Commerce, Court of Cassation of France, First Civil Law Chamber, Judgment No. 1289 FS-P + B, Appeal No. M 16-22 131, 13 December 2017’ Kluwer Law International
  • Barysheva N and Chessa V, ‘Chambre de Commerce Internationale v. SARL Projet Pilote Garoubé, Court of Appeal of Paris, No. 15/23553, 24 May 2016’ (2016) 2016 Revue de L’Arbitrage 649
  • Beale HG (ed), Chitty on Contracts (31st edn, Sweet & Maxwell 2015) Beechey J, ‘Amr Amin Hamza El Nasharty v. J Sainsbury Plc, High Court of Justice, Queen’s Bench Division (Commercial Court), 2007 Folio 920, 13 November 2007’ Kluwer Law International
  • Bensaude D, ‘Conséquence Du Non-Paiement de Provisions Séparées En Arbitrage CCI’ (2013) Gazette du Chronique de la jurisprudence de droit de l’arbitrage

Tarafların Ekonomik Müzayaka Hali ve Uluslararası Tahkim: Uluslararası Tahkimde Masraf Avanslarını Ödeyememe ve Tahkim Anlaşmasının Geçerliliği Arasındaki Etkileşim

Year 2020, Volume: 40 Issue: 1, 573 - 611, 30.06.2020

Abstract

Milletlerarası tahkime ilişkin masraflar, mahkemelerde görülen davalara nazaran taraflar bakımından önemli ölçüde külfetli olabilmektedir. Neredeyse hiçbir milletlerarası tahkim davası bakımından adli yardım kurumu bulunmamaktadır. Ekonomik bakımdan müzayaka halinde bulunan tarafın tahkimdeki avans ödemelerini ifa edememesi halinde, yüksek ihtimalle hakem(ler) çalışmalarını askıya alabilir ve hatta ilgili talepler geri çekilmiş sayılabilir. Bu durumda, müzayaka halinde olan tarafın, tahkime ve dolayısıyla AİHS m.6 uyarınca “adalete erişim” hakkından mahrum kalması gündeme gelecektir. Bu çalışmada, bağlayıcı nitelikteki tahkim sözleşmesinin tenfizi ile müzayaka halindeki tarafın “adalete erişim” hakkının temini arasındaki dengenin ne şekilde sağlanabileceği hususu incelenmiştir. Çalışmanın sonucunda, milletlerarası tahkimde müzayaka halindeki tarafın tahkim masraflarını ödeyememe hali bakımından müzayaka halini ispat etmesinin, tahkim şartının geçersiz sayılması için tek başına yeterli sayılmaması gerektiği ortaya konulmuştur. İstisnai olarak, tahkim şartına itiraz eden tarafın müzayaka haline düşmesine, başlıca veya büyük ölçüde karşı tarafın davranış ve eylemlerinin sebep olduğunun ispatı halinde devlet yargılamasına devam edilebilmelidir. Tahkim şartının geçerliliğine itiraz eden tarafça tesis edilecek bu ilişkinin ispatında uygulanacak ispat derecesi -hiç değilse tahkim anlaşmasının geçerliliğinin incelenmesinde uygulanan prima facie standardından yüksek olacak şekilde- yüksek tutulmalıdır. Çalışmada son olarak, tahkime erişim imkanını kolaylaştırabilecek alternatif çözümler incelenmiştir. .

References

  • ‘2019 Managing Legal Risk Report: A Survey of CFOs and Finance Professionals’ <https:// burfordcapital.com/media/1266/managing-legal-risk-report-2019.pdf> accessed 10 November 2019
  • Abrams DS and Chen DL, ‘A Market for Justice: A First Empirical Look at Third Party Litigation Funding’ (2013) 15 University of Pennsylvania Journal of Business Law 1074
  • Altenkirch M and Frohloff J, ‘The Advance on Costs in Investment Arbitration’ 33 ICSID Review - Foreign Investment Law Journal 723
  • Alvarez HC, ‘Industrial Service & Machine Inc. Operating as McClean Anderson a Division of Industrial Service & Machine Inc. v. Resin Systems Inc. Operating as RS Technologies a Division of Resin Systems Inc., Alberta Court of Appeal, 0701-0343-AC, 10 March 2008’ Kluwer Law International
  • Arroyo M, ‘Chapter 17, Part II: Commentary on the ICC Rules, Article 37 [Advance to Cover the Costs of the Arbitration]’ in Manuel Arroyo (ed), Arbitration in Switzerland: The Practitioner’s Guide (Second Edition) (2nd edn, Kluwer Law International 2018)
  • Balkar Bozkurt S, ‘Milletlerarası Tahkimde Yargılama Masraflarının Hak Arama Özgürlüğüne Etkisi ve Sonuçları’ (2015) 10 Bahçeşehir Üniversitesi Hukuk Fakültesi Dergisi 121
  • Barysheva N and Chessa V, ‘Société Projet Garoubé Pilot c. International Chamber of Commerce, Court of Cassation of France, First Civil Law Chamber, Judgment No. 1289 FS-P + B, Appeal No. M 16-22 131, 13 December 2017’ Kluwer Law International
  • Barysheva N and Chessa V, ‘Chambre de Commerce Internationale v. SARL Projet Pilote Garoubé, Court of Appeal of Paris, No. 15/23553, 24 May 2016’ (2016) 2016 Revue de L’Arbitrage 649
  • Beale HG (ed), Chitty on Contracts (31st edn, Sweet & Maxwell 2015) Beechey J, ‘Amr Amin Hamza El Nasharty v. J Sainsbury Plc, High Court of Justice, Queen’s Bench Division (Commercial Court), 2007 Folio 920, 13 November 2007’ Kluwer Law International
  • Bensaude D, ‘Conséquence Du Non-Paiement de Provisions Séparées En Arbitrage CCI’ (2013) Gazette du Chronique de la jurisprudence de droit de l’arbitrage
There are 10 citations in total.

Details

Primary Language English
Subjects Law in Context
Journal Section Articles
Authors

Necip Fazıl Şanlı This is me 0000-0002-6433-5921

Publication Date June 30, 2020
Submission Date May 20, 2020
Published in Issue Year 2020 Volume: 40 Issue: 1

Cite

APA Şanlı, N. F. (2020). Party Impecuniosity and International Arbitration: The Interplay between Failure to Pay the Advance Costs and Validity of Arbitration Agreement in International Arbitration. Public and Private International Law Bulletin, 40(1), 573-611.
AMA Şanlı NF. Party Impecuniosity and International Arbitration: The Interplay between Failure to Pay the Advance Costs and Validity of Arbitration Agreement in International Arbitration. PPIL. June 2020;40(1):573-611.
Chicago Şanlı, Necip Fazıl. “Party Impecuniosity and International Arbitration: The Interplay Between Failure to Pay the Advance Costs and Validity of Arbitration Agreement in International Arbitration”. Public and Private International Law Bulletin 40, no. 1 (June 2020): 573-611.
EndNote Şanlı NF (June 1, 2020) Party Impecuniosity and International Arbitration: The Interplay between Failure to Pay the Advance Costs and Validity of Arbitration Agreement in International Arbitration. Public and Private International Law Bulletin 40 1 573–611.
IEEE N. F. Şanlı, “Party Impecuniosity and International Arbitration: The Interplay between Failure to Pay the Advance Costs and Validity of Arbitration Agreement in International Arbitration”, PPIL, vol. 40, no. 1, pp. 573–611, 2020.
ISNAD Şanlı, Necip Fazıl. “Party Impecuniosity and International Arbitration: The Interplay Between Failure to Pay the Advance Costs and Validity of Arbitration Agreement in International Arbitration”. Public and Private International Law Bulletin 40/1 (June 2020), 573-611.
JAMA Şanlı NF. Party Impecuniosity and International Arbitration: The Interplay between Failure to Pay the Advance Costs and Validity of Arbitration Agreement in International Arbitration. PPIL. 2020;40:573–611.
MLA Şanlı, Necip Fazıl. “Party Impecuniosity and International Arbitration: The Interplay Between Failure to Pay the Advance Costs and Validity of Arbitration Agreement in International Arbitration”. Public and Private International Law Bulletin, vol. 40, no. 1, 2020, pp. 573-11.
Vancouver Şanlı NF. Party Impecuniosity and International Arbitration: The Interplay between Failure to Pay the Advance Costs and Validity of Arbitration Agreement in International Arbitration. PPIL. 2020;40(1):573-611.