Arbitration Vs. Litigation In Forex Trading: Guidance From San Antonio Attorneys – The ever-increasing volume of transnational commercial activity has created a demand for a dispute resolution system capable of rendering enforceable judgments that is also safe, cost-effective, expeditious and impartial.[1] In the absence of an international authority with universal jurisdiction over the settlement of international commercial disputes, the only option is to rely on state-based jurisdiction, i.e. litigation or arbitration.[2] Given the limitations of national courts in meeting the needs of global commerce – [3] e.g. inadequate or even corrupt legal frameworks in less developed jurisdictions, lack of familiarity and knowledge of the laws by foreign parties, enforcement of foreign awards – arbitration has long become the preferred method for resolving disputes arising from international commercial transactions.[4] Arbitration of commercial disputes has been used since the dawn of trade, [5] but as international trade relations have grown enormously since the 19
In the 20th century, the modern arbitration systems were developed to eliminate the limitations posed by global commercial litigation: cost and speed, assertion of jurisdiction by national courts, choice of law, choice of forum, unfamiliarity with foreign jurisdictions, and enforcement of non-domestic judgments. [6]
Arbitration Vs. Litigation In Forex Trading: Guidance From San Antonio Attorneys
Arbitration is a non-judicial public and private dispute resolution mechanism agreed upon by the parties as an alternative to litigating their disputes in national courts.[7] As such, arbitration arises out of a contract.[8] Although the voluntary submission of disputes to a neutral third party is by no means a recent phenomenon, [9] the modern incarnation of arbitration has several distinctive characteristics that have contributed to its rapid growth.[10] Most notably, arbitration provides the parties with the desired flexibility to design the system under which their disputes will be resolved, as opposed to award.[11] However, given the growth of arbitration in all areas of civil dispute resolution [12], it is difficult to attribute its attractiveness to a single factor. Compared to its legal counterpart, arbitration is consensual and customizable, possibly confidential, likely faster, more efficient, and more cost-effective.[13] Furthermore, arbitral awards are final and enforceable.[14]
Crypto Exchange Fights To Pause Class Actions That It Would Rather Arbitrate
As a method of civil dispute resolution, arbitration can seem worlds apart from the realm of criminal law. After all, an arbitrator is not a judge, and jurisdiction over criminal sanctions remains solely in the hands of national courts. But as arbitration grows in popularity, especially in international trade, arbitrators are increasingly confronted with civil disputes tainted by economic crimes such as tax evasion, theft, corruption extortion and money laundering. The interaction between economic crime and arbitration gives rise to a wide range of complex legal issues, e.g. burden of proof, requirements of proof, applicable criminal law, enforcement and judicial review. [15] Contracts tainted by financial crimes put arbitrators in a difficult position. On the one hand, arbitrators have certain duties to the parties and the process; on the other hand, arbitrators have certain responsibilities as arbitrators, members of the legal community and individuals. So what are the legal and ethical obligations of arbitrators when faced with crime? Put another way, should arbitrators be guided by the enforcement of public policy against fraudulent transactions or the public policy in favor of upholding arbitration agreements?[16]
Money laundering is one of the crimes that arbitrators face when deciding international commercial disputes. It has come under increased international scrutiny and criminalization in recent years[17] and is considered a crime in most jurisdictions due to its universally recognized devastating impact on commerce and society at large.[18] Despite the implementation of many national and international instruments for its prevention, it is still widely practiced.[19] The definition and scope of money laundering is determined by the national laws or the international conventions, according to which it is considered a crime. Actions that constitute money laundering are strictly defined in national laws and multilateral directives[20]. The United Nations definition is found in the Vienna Convention.[21] Although it is not easy to find a universal definition of money laundering, [22] the common characteristic of all money laundering schemes is the goal of concealing the sources of income from criminal activities[23].
There are different scenarios where money laundering is submitted to an arbitral tribunal. First, and more frequently, is when a party raises a money laundering defense against the enforcement of a contract.[24] In such a scenario, the party alleging money laundering refuses to fulfill its contractual obligations for the other party’s alleged criminal conduct in relation to the contract. Another possibility is when the dispute itself is carried out as part of a wider money laundering scheme. That is, there is no real dispute between the parties and the arbitration is used as a tool to hide and legitimize criminal sources of assets.[25] In these situations, depending on the role of the arbitrator, two different scenarios can arise. First, despite her knowledge, the arbitrator is being used to issue an arbitration award and thereby legalize a criminal activity. It may also be the case that the arbitrator acts as an accomplice.[26] Skirmish disputes, where parties attempt to deceive the arbitrator, involve the following steps: the offenders of the “predicate” offense typically establish two separate businesses. The companies then engage in a commercial venture that involves the transfer of other goods or the performance of services, often at unreasonably high/low prices (compared to the market value of similar products or services). The underlying contract contains an arbitration clause, which serves to exclude the court system from deciding a potential dispute arising in connection with the contract. Next, they generate a fake dispute and often act diligently to produce the necessary documents to support their positions. As mentioned earlier, such agreements are completely bogus and often indicate excessively unreasonable prices.[27] When the arbitrator issues an enforceable award, the process is complete. The defendant will then proceed to transfer money of illegal origin to the plaintiff’s bank account, thereby legalizing the criminal activity. [28]
Despite the global success of arbitration, there is no universally recognized set of ethical standards for arbitrator conduct, [29] perhaps due to the private and autonomous nature of arbitration. But there are standards of ethical conduct imposed on arbitrators by arbitration institutions, national law and courts, [30] e.g. the duty of privacy, the duty to disclose conflicts of interest, [31] the duty to act with competence and care[32] and the duty of impartiality and fairness.[33 ] These duties may be in relation to parties, their contract, arbitration institutions, courts or the applicable national or international public policy. Ethical and legal obligations arise from various sources, e.g. legislation, conventions or institutional rules. It is also possible for a single duty to have both legal and ethical roots. In the absence of a universally binding criminal law body, the problem of what an arbitrator should do when faced with cases of money laundering in international trade disputes is borne out of a conflict between the arbitrator’s legal and ethical duties to the parties under the arbitration agreement. , and other duties arising from considerations of public order in combating criminal activity both as an individual and as a member of the legal profession.[34]
International Arbitration Report
The subject of public policy is a muddy and complex issue that raises several challenging legal questions. What public policy means can be very different across jurisdictions or even the way different international instruments conceptualize it. Nevertheless, the practice of money laundering is considered contrary to transnational public policies in almost all jurisdictions. As these transnational public policy standards are fundamentally drawn from national standards and international treaties and conventions, they reflect principles most commonly adopted by jurisdictions around the world.[35] The common practice of arbitral tribunals is that a standard of “transnational public policy” is the applicable standard in cases of corruption, [36] and that it is a standard drawn from widely accepted national standards of public policy.[37 ] Although arbitrators are precluded from imposing criminal penalties, injunctions or fines on the parties, the “transnational standards of public policy” are relevant when deciding a case involving economic crime to determine the civil consequences of contracts that is tainted by money laundering.[38] Not only is transnational public policy directly applicable in international arbitration, but international arbitral tribunals also have the power to determine the content of transnational public policy[39].
When confronted with money laundering, two fundamental questions arise for an arbitral tribunal. First, it must determine whether or not it has jurisdiction, ie. whether there is a sufficient relationship between the contract and the alleged criminal conduct. Second, if jurisdiction exists, it must determine what effect the consideration of international public policy has on the underlying contract. If money laundering, as raised by one of the parties or manifested to the arbitrator in the dispute as a false dispute, is proven to the satisfaction of the court, the validity of the contract will depend on the applicable national law.[40] As noted earlier, transnational standards of public order (derived from national standards of public order, as reflected in national criminal law) are directly applicable, and arbitral tribunals determine their content on a case-by-case basis.[41] However, failure to do so does not potentially expose arbitrators to criminal liability, as does failure to agree
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