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Managing Fraud Cases Through International Arbitration

Fraud cases are always challenging, but in an international situation, they become even more so. Arbitration can present an effective method for managing such cases, but many factors must be considered.

Separability of Arbitration Clauses

As an accepted principle, separability of arbitration clauses allows for the arbitration clause to be separated from the underlying agreement and furthermore allows arbitration proceedings to continue when the question at the center of the case is one of validity.

What Is Kompetenz-Kompetenz & What Does UNCITRAL Say about It?

Today, it is generally accepted that an international arbitral tribunal has the authority to make its own determination. Such authority is derived from a principle known as Kompetenz-Kompetenz, which means that arbitrators retain the authority to make a ruling regarding the validity of an arbitration agreement. According to UNCITRAL Model Law, this principle is clearly expressed and allows an arbitration clause to be treated entirely independent of any other terms of the contract in question.

Is a Dispute Concerning Fraud Arbitrable?

Among the first questions that must be asked is whether a dispute concerning fraud is actually arbitrable. The agreement itself determines whether accusations of fraud fall within the scope of arbitration. In cases in which one party alleges that the main contract was the result of inducement by fraud, the doctrine of separability maintains that the arbitration clause would not be affected, thus giving an arbitration tribunal jurisdiction.

Seat in an Arbitration Case

The selection of a seat in an arbitration case is of utmost importance, as the seat determines the law that will govern not only the arbitration procedure but also the rights and process related to the enforcement of the arbitration award.

How Important Is the Seat of Arbitration?

The choice of venue should not be confused with the seat of arbitration, as it is entirely possible for the hearings related to the arbitration to take place in multiple countries. In such instances, the seat of arbitration would remain the same and would determine the court that has the supervisory jurisdiction over the proceedings.

Can a Venue Be the Seat of Arbitration?

Although a venue and arbitration seat could be in the same location, and in fact, that is often the case, this is not required. Venue merely refers to the geographical location in which the arbitration proceedings take place.

Choosing a Seat in a Fraud Claim

Given the importance of the seat of arbitration, it is vital that careful consideration be given to the selection of the arbitration seat.

Enforcing an Arbitral Award Where Issues of Fraud Are Raised

What Is An Arbitral Award?

Following the conclusion of the hearings, the arbitrator will then render his or her decision. This is referred to as the arbitration award. The award could be financial in nature, but it could also be some form of non-financial award, such as calling for certain practices to be halted.

When Is the Arbitral Award Said to Be Final?

In most instances, the arbitral award will be maintained and is considered final. It should be understood that some exceptions might apply, such as cases in which the arbitral award was won through means of corruption, misconduct, or fraud.

Enforcing an Arbitral Award Where Issues of Fraud Are Raised

In cases in which issues of fraud are raised, it is possible that the award could be set aside, but this is not always the case. In the case of Chantiers de l’Atlantique S.A. v. Gaztransport & Technigaz S.A.S, the award was upheld even though the court found that the material evidence presented to the arbitral tribunal was fraudulent.

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