• General principles and aims of arbitration

    Chapter 3 - Cotton marketing - Arbitration


    Arbitration* can be defined as a private, formal and binding process available to contract parties providing a fair and impartial resolution to disputes without undue delay or cost. It produces an award which is enforceable through the courts. The result of arbitration is the issuance of a binding and enforceable award, subject to any appeal.

    Contracts should provide a remedy for any disputes that arise during the life of the contract.

    Arbitrations are conducted on the basis and existence of an ‘arbitration agreement’. In the case of contracts subject to English law this must be evidenced in writing between the parties, either at the time of contract or at some subsequent date. Arbitrations are conducted by people who hold experience and expertise within the trade. They are conducted in private, with the parties agreeing to appoint either a sole (one) arbitrator or each appointing their own arbitrator to act for and on or behalf of that party. Arbitrators are not advocates of their respective parties and must act impartially at all times.

    A Tribunal may, as dictated under the rules of any related arbitral association, include the appointment of a chairperson who holds responsibility for the directions issued and who ensures the timely and cost-effective conduct of proceedings.

    An arbitration clause should clearly state the arbitral centre to be used. There are different centres of arbitration, located in different countries. These include:

    • France – Association Française Cotonnière
    • United Kingdom – International Cotton Association Ltd
    • Germany – Bremer Baumwollbörse Bremen Cotton Exchange
    • United States – American Cotton Shippers Association
    • China – China Cotton Association
    • India – Cotton Association of India

    The United Nations Commission on International Trade Law (UNCITRAL) published in 1985 the model law that specifically addresses international commercial arbitration. It provides an arbitration law written in plain language which is easy to understand giving parties access to a valuable tool for arbitration, subject to adoption by the parties.

    The model law has been adopted by certain counties, with the exception of England which has its own comprehensive system for arbitration with clear directions stated within the Arbitration Act of 1996. The International Cotton Association Ltd (ICA), located in Liverpool, England, provides contract parties with a set of Bylaws and Rules under which a majority (approximately 60%–70%) of the global trade in cotton is transacted and arbitrations conducted.

    The following sections will deal specifically with arbitrations and arbitration proceedings conducted under ICA Bylaws and Rules. These are subject to the application of English Law and the Arbitration Act 1996.

    *Reference to and extracts of the ICA Bylaws and Rules are provided with the kind permission of The International Cotton Association Ltd, Liverpool, England. This section is intended as a general guide to assist in the general understanding of formalities and procedures involved at arbitration. The extracts and references are not intended as a definitive expression of the those bylaws and rules and do not take precedence over the ICA Bylaws and Rules which should be consulted in their entirety by application to ICA or online at www.ica-ltd.org

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    Cotton Exporter's Guide

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