International commercial arbitration in Paris for a company from Kyrgyzstan
Kyrgyzstan is a participant in international economic organizations. Including the WTO, the EAEU and the Shanghai Cooperation Organization.
Of course, the high economic activity of companies from Kyrgyzstan and growing trade turnover sometimes leads to international disputes with counterparties from other countries. These could be disputes over supply contracts, investment contracts, loans, leases, etc.
In this article we will talk about one of the most effective options for resolving an international dispute – applying to International Commercial Arbitration in Paris.
We will give complete instructions on how to file a claim in Paris arbitration, conduct a dispute, draw up documents and increase the chances of winning.
Paris Arbitration. Legal basis
The Paris Arbitration is not a state court that hears international economic disputes. They are part of the global system of commercial arbitration, which is established by the New York Convention.
The parties to the convention are more than 170 countries around the world that have arbitration and recognize the decisions of all commercial arbitrations. Kyrgyzstan has also been a party to the convention since 1996.
Some statistics:
In 2020, the ICC Court registered a total of 946 new cases. Statistics for 2020 also showed the highest number of parties to cases and the appointment or confirmation of arbitrators, as well as the geographic diversity of arbitrators and arbitration venues.
What to do if a dispute arises?
If the counterparty has not fulfilled its obligations or violated them, then you should first pay attention to the pre-trial settlement of the dispute.
We remember that any trial involves costs and time, so you should first try to reach an agreement with your partner.
Send a claim to your counterparty describing your situation and requirements. If the counterparty does not respond or does not want to fulfill its obligations, then this claim will later be needed in Paris arbitration.
This will be proof that we tried to resolve the dispute without going to arbitration.
Arbitration clause
First of all, the parties to the dispute must have a legal basis for filing a claim with the Paris Arbitration Court. This may be an arbitration clause in a contract or an additional arbitration agreement signed by the parties.
In both situations, it must be stated that the Parties have agreed that all disputes arising under the contract will be considered by the Paris International Commercial Arbitration.
There are also examples of arbitration clauses from the Paris Arbitration Rules:
“All disputes arising out of or in connection with this contract shall be finally settled in accordance with the Rules of Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with those Rules.”
– “the arbitration panel will consist of 3 arbitrators/sole arbitrator”;
– “the place of arbitration will be […]”;
– “the language of the arbitration proceedings will be […]”;
– “this contract is governed by substantive law […]”.
When filing a claim, the Arbitration will also ask what grounds the parties have for applying to commercial arbitration.
Why do we choose commercial arbitration in Paris?
The New York Convention establishes a system of commercial arbitration in many countries around the world. The rules of these arbitrations are similar, and the advantages are also similar, which we will talk about now.
Paris arbitration is one of the most popular arbitrations, has a large number of professional arbitrators and an effective system for resolving disputes.
There are also several other advantages that will be of interest specifically to business partners who want to make going to court easier.
Choosing a meeting format
Of course, quite a lot of disputes occur with counterparties from different countries and here it becomes difficult to travel to participate in a court hearing.
There is no such problem in the Paris arbitration. The regulations establish that the parties can choose the online format for considering the dispute and not worry about traveling to Paris.
Selection of Arbitrator
One of the most important and useful advantages of arbitration is the freedom to choose an arbitrator.
As a rule, judges in state courts cannot be experts in all areas of law, much less in private international law or Incoterms rules.
Knowledge of Incoterms rules is the specialty of many arbitrators in commercial arbitrations. If a company from Kyrgyzstan, for example, needs a specialist who can understand Incoterms 2020 and who knows English, then they can find him and agree on it in commercial arbitration.
Language selection
The parties can also choose the language to consider the dispute. English is most often chosen because of its popularity.
Simplicity and confidentiality of the dispute
The arbitrator in commercial arbitration will consider the case on its merits, evaluate the evidence and positions of the parties from the point of view of private international law.
Commercial arbitration itself has fewer formalities than state courts, which are very demanding and have a very busy time.
Another advantage of choosing Paris arbitration is that all disputes are confidential, you will receive your decision quite quickly and it will not be published.
Request to the Paris Arbitration
Now let’s talk about the procedure, how to apply to commercial arbitration.
The first thing we need to do is submit a request for arbitration. This can be done in a simple and convenient way, by email or through the service on the arbitration website.
Your request for arbitration must include:
- Identification data of the parties;
- Arbitration clause or additional arbitration agreement;
- Pre-trial claim (if there was one);
- Contract;
- Receipt for payment of arbitration fees;
- Choosing an arbitrator, language, and format for the dispute.
Calculation of the cost of a dispute in Paris arbitration
Calculating legal costs is a fairly important part of working with commercial arbitration.
Of course, the parties will receive effective consideration of the dispute, but this costs more than a state court.
You can calculate the costs using the calculator on the arbitration website.
Example: if the amount of claims of a company from Kyrgyzstan is $100,000, then the legal costs of one arbitrator will be $10,060 in arbitrator fees and $5,765 in administrative costs.
The amount of the claim is the price of the claim, that is, the main monetary claim plus the sanctions in the contract.
Procedures in Paris arbitration
It is also necessary to choose a procedure for considering the case. There is regular, accelerated and emergency.
The usual procedure is consideration within 6 months, three or one arbitrator, the parties receive the decision immediately after it is made.
Expedited procedure – up to $2 million, one arbitrator, his fee is reduced by 20 percent, a case management conference must take place within 15 days after the transfer of the case materials to the arbitrator, who must make an arbitration decision within 6 months
There is also an emergency procedure. The parties send documents, an arbitrator is appointed within 24 hours and within 5 days he resolves the dispute.
Statement of claim to the Paris Arbitration
The statement of claim is the main procedural document. The arbitrator examines the content of the claim and draws conclusions, and then makes a decision.
The statement of claim must describe the position in detail and show the facts why the plaintiff is right.
We recommend using the following part of the document in the statement of claim:
At the top right we write the details of the arbitrator and the counterparty, his name, legal address, tax number, and so on.
Description of basic facts
This will be the largest part of the claim. The plaintiff must collect all the data about the dispute, study the contract, payment documents, claims in order to write what happened in the statement of claim.
It is important to describe all the facts, starting with the contract
For example: A company from Kyrgyzstan is a buyer under a supply contract with a supplier from Germany. However, the Supplier did not ship all goods on time.
- What you should pay attention to:
- Terms of the contract (terms, delivery procedure);
- Payment documents (the fact that the Goods were paid for);
- Negotiations with the counterparty
- Acts of receipt of goods;
- Calculation of the amount of debt for the Goods;
- Terms of the sanctions contract.
As a reminder, the value of the claim is the requirement of the main obligation plus the sanctions, established contract or law. (Fine, penalty, penalty).
Legal position
We have already described our situation and what happened
In this part of the claim, our goal is to show that we are right from the point of view of the law.
It is necessary to study the legislation of countries or international private law. If you use Incoterms rules, please read them. In some cases, case law can be found. In this part, it is better to contact a specialist to draw up a legal position.
Plaintiff’s requirements
Everything is simple here, we write what exactly we want to receive from the defendant. This could be money, fulfillment of obligations, compensation for harm, and so on.
It is important to show clear requirements in arbitration.
Applications
We add all the documents that we used when writing the claim to the application and attach copies to the claim file.
The arbitrator should read these documents to understand the situation
Interim measures
If there is a possibility that the defendant will escape or hide or sell his property, then it is necessary to ask the arbitration to introduce interim measures.
This will be done in a separate arbitration document.
Application for compensation of legal expenses
As we remember, going to commercial arbitration is more expensive than going to state court. However, we can use the rule for compensation of costs, which is established by the Paris Arbitration Rules.
This means that if the plaintiff wins the dispute, he will ask the arbitration court to oblige the defendant to compensate legal costs. And in this way, the plaintiff can recover these large funds.
Obtaining a Paris Arbitration Award
The time frame for considering a dispute depends on which procedure you choose. However, there is an advantage in the fact that the decision, after its preparation, will be sent to the parties immediately.
In addition, the decision of commercial arbitration cannot be appealed. In state courts, this could take even more than a year.
If the parties to the dispute have entered into a settlement agreement, then it is better to do this by arbitration in order to legalize the defendant in the country.
Enforcement of the decision in Kyrgyzstan
Kyrgyzstan recognizes commercial arbitration decisions on the territory of its country.
However, in order to execute it, it is necessary to submit an application to the state court to obtain a writ of execution.
The fact is that the basis for the execution of court decisions is a writ of execution; it can only be issued by a state court on the basis of a decision of commercial arbitration.