Arbitration

What is arbitration?

Arbitration is a method of dispute settlement using private entities known as "arbitral tribunals".

Arbitral tribunals usually consist of either one or three arbitrators. The primary role of an arbitral tribunal is to apply the law and make a dispute decision by administering a so-called "arbitral award".

In principle, arbitral awards are final and binding. They can only be challenged before a state court under exceptional circumstances. For example, it applies to cases where the parties never validly agreed on arbitration. Arbitral awards can be enforced in most countries worldwide.

Arbitration proceedings usually involve the following steps:

Any arbitration proceeding is based on a written agreement of the parties. They submit a given dispute to arbitration instead of the state courts, this becomes the "arbitration agreement". Arbitration agreements can be found in the majority of commercial contracts, particularly in contracts relating to international transactions.

In terms of procedure, arbitration provides the arbitrators and the parties with significant freedom and flexibility. Parties may choose their arbitrators, the place of arbitration and / or the language of the proceedings. They may also agree on how to structure and how to time their proceedings. However, the parties freedom is still somewhat restricted. They may not deviate from the principles of fairness and equality, the right to be heard and the right to be represented by a lawyer.

Two types of arbitration are available; institutional and ad-hoc. In institutional arbitration, the institution assumes specific administrative functions, such as the servicing of briefs etc. The degree of involvement may vary from one institution to another, but the dispute itself will always be solely decided by the arbitral tribunal. In ad-hoc proceedings, these administrative functions are either assumed by the tribunal itself or delegated to third parties.

Hamburg is the seat of several well-known arbitration institutions, such as the German Maritime Arbitration Association (GMAA), the Court of Arbitration of the Hamburg Chamber of Commerce, the Chinese European Arbitration Centre (CEAC) and various commodity arbitration institutions. Hamburg is also frequently chosen as a place for arbitration by institutions based outside Hamburg, such as the German Institution of Arbitration (DIS) and the International Chamber of Commerce (ICC). The "Hamburg Friendly Arbitrage" is a special form of ad-hoc arbitration developed from local trade usages. These are published in Section 20 of the "Local Usage in the Commodity Trade in Hamburg" (Official Gazette No. 237 dated October 13, 1958). Hamburg based arbitrators have formed the Hamburg Arbitration Circle (HAC) as their association to organize lectures and to support the promotion of Hamburg as a place of arbitration.

Main benefits

  • Arbitration is private.
    Arbitral proceedings including oral hearings, these are not open to the public. Parties and arbitrators are often bound by strict rules of confidentiality. Thus, business secrets and sensitive information can be protected from the public, media and / or competitors.
  • Arbitrators are experts.
    Parties may freely choose their arbitrators as long as they are of an impartial and independent nature. Arbitrators can be selected from different nationalities and professional fields. This guarantees the professional and personal expertise of those who decide the dispute.
  • Arbitral awards are enforceable.
    Arbitral awards can be enforced in Germany and abroad. In many countries arbitral awards can be enforced more easily than state court decisions. This is due to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.
  • Arbitration may save time and costs.
    Tailor-made procedures and the absence of appellate and / or review proceedings provide the opportunity for arbitration proceedings to be completed within a relatively short time. Further costs can be saved by choosing a suitable language and / or venue which in turn avoids unnecessary translation and / or travel costs.