The World Trade Organization And International Commercial Arbitration In Australia

The Emergence of GATT and WTO

World Trade Organization is one of the most prestigious International Organizations that aims at bring harmony, peace and co-operation amid the national and international nations. The history, its role and its strength and weakness are analyzed in the present section.

 In 1947, the Second World War was over. But from the ashes of the World War II arose International Monetary Fund and The General Agreement on Tariffs and Trade (GATT). The mains reasons for the development of these two international bodies are the fear that has immerged from the destruction and damage that has been left after the war. Thus, the international bodies intend to start novel and afresh. However, GATT though has been established with all new hopes by an international co-operation, but, there were endless regional and national conflicts that resulted in Cold war and eventually in the development of the World Trade Organization which inherited GATT.

On 15^th April 1994, around 124 nations entered into a Marrakesh Agreement wherein they replaced GATT and resulted in the official establishment of WTO.

The international trade is regulated by the WTO. With the increase in globalization there arose a need for an international organization which has the capacity to manage the trading system amid the international and national communities. With the increase in trade there are various problems arose, such as, trade barriers, protectionism, infringement of intellectual properties, subsidies etc. This is mainly because the trading system of every nation is different from each other.  With the establishment of the WTO, a mediator is created amid the nations wherein it acts as a dispute resolute in case if any disputes are arisen amid the nations. It is the Ministerial Conference of the highest decision making body of WTO that meets in every two years. All members are joined together to deal with the matters that comes under the multinational trade agreements.

It is now important to understand the main role that is catered by WTO

There is no single role or function that can be attributed to WTO. The prime role that is undertaken by WTO includes:

1. The most important function that can be attributed to WTO is that it takes a check on the administration, operation and implementation of the covered agreements;
2. Whenever a dispute arose amid the international parties then it acts as a podium where disputes can be settled and negotiations can take place.

• Procedures and Rules are framed by WTO in order to resolve the disputes.

1. The national trade policies are propagated and reviewed by WTO;
2. A global economic policy making is established so that there is transparency and coherency in the trade policies;
3. WTO makes sure that the low income and least developed countries must be provided assistance so that they can comply with the rules and disciplines of WTO by providing training and technical co-operation;

• A framework must be provided for the administration, operation and implementation of the Multilateral Trade Agreements;
• It must act in cooperation with international Monetary Fund (IMF) and with the International Bank for Reconstruction and Development (IBRD) to achieve a global economic policy.

1. It helps in the regulation of trade in services and goods;
2. It makes sure that there should not any kind of discrimination that prevails;

It is now important to understand the strengths and weakness of WTO.

Some of the strengths of WTO include:

1. The powers that are allocated to GATT are increased with the coming of WTO. WTO has now a settlement disputes which was not present in GATT.  With the coming if the dispute settlement regime the trust and support system that was lacking initially was rebuilt.
2. The principle of non-discrimination is one of the strengths of WTO. WTO makes sure that every nation has the right to protest in situations of conflicts and is a function which was not present on GATT.

• A multilateral regime was formulated  and which has made sure that no powerful country has the capacity to impose their own strengths and wills on the weak countries.

1. There is free trade that is also initiated by WTO.
2. The trade barriers are less resulting in the increase of income.
3. Trade stimulates has resulted in economic growth which increase the employment scope.

Some of the weakness of WTO includes:

1. Though it is strength that a dispute settlement mechanism has been established but the time duration that is required for the final settlement of the disputes is very lengthy. Because of which there is significant amount of economic harm that is caused to the plaintiff.
2. Various environmental protection laws are formulated but they are very difficult to prove at international level;

• The gap that exist mid the developing nations and the developed nations is not curbed by the WTO even after so made efforts;

1. High import duties can be imposed by rich countries making it very difficult for the developing countries to manage;
2. The general principles are violated by most of the countries and which hampers the dispute settlement mechanism.
3. There is lack of transparency making the organization a home for rich and not for the poor nations;

Thus, these are the some of the strengths and weaknesses that can be attributed to WTO. Regardless of the weakness that is attributed to WTO, there is no discussion to the fact that the emergence of WTO is one of the significant actions that are taken at international level which has tried to achieve peace and harmony amid the global nations.  

The Role of WTO

Alternative Dispute Resolution is a mechanism or a non-judicial function which is required to resolve the disputes that arise amid the parties without the interference of the courts. In order to achieve fairness, cost effectives, parties are moving from litigation to Alternative Dispute Resolution mechanism. The most common type of Alternative Dispute Resolution that are normally found are Mediation, Early Neutral Evaluation, Expert Determination and Arbitration

Arbitration is a kind of Alternative Dispute Resolution process wherein the parties present evidence and arguments to the arbitrator who then makes a determination which is binding and final and the award is enforceable. It is a private and confidential process. It is an effective and flexible mechanism to resolve the disputes at both national and intentional level.

The main advantages and disadvantages that are attributed to the process of arbitration are:

Advantages  

 The main advantages that can be attributed to the process of arbitration include:

1. The process of arbitration is not time consuming and the disputes are resolved in a timely manner.
2. When compared with litigation, the process of arbitration is very cost effective and thus not economically burden the parties to the disputes;

• The decisions of the arbitration are final and the award is enforceable. Thus, it makes the award of the arbitration as authentic. Thus there is end of the dispute which is not present when the disputes are resolved through litigation which includes and appellant technique

1. The arbitrators that decide the dispute amid the parties are selected by the parties themselves. Thus, there is a sense of fairness that is present in the process of arbitration.
2. The paperwork, hearings etc in the process of litigation is cumbersome whereas the procedure that is taken by the a process of arbitration is much simpler;
3. The process of arbitration took place in closed doors and thus there is presence of confidentiality that is maintained.

Disadvantages  

The main disadvantages that can be attributed to the process of arbitration includes:

1. Though the process of arbitration is found to be very cost effective but it is also become one of the disadvantages. This is because it is not always that the process of arbitration is cost effective. Normally when the arbitration are non-binding in nature then the award is not binding in nature and this results in giving leverage t the parties to go to court against the decisions and this in return results in making the process of dispute resolution expensive;
2. At times the fairness regarding the process of arbitration is also challenged as the arbitrators are selected by the parties themselves and thus there are chances of being biasness in the process of arbitration;

• Normally when the disputes arose where there are multiple arbitrator or parties or when the disputes very complicated then the arbitration does not come to an end in a speedy manner;

1. The parties to the arbitration select the place of arbitration ad this at times very inconvenient to reach;
2. Normally the arbitration decision is final and this becomes a disadvantages because if any party is genuinely agree vied with the decision of the arbitrator then his chances of making an appeal to seek rescue is not available.

Thus, these are some of the advantages and disadvantages that can be attributed to the process of arbitration.

However, it is now important to analyze the benefits and the costs of resolving an international commercial dispute by arbitration in Australia.

Benefits and the costs of resolving an international commercial dispute by arbitration in Australia

Normally when a contract takes place amid the parties which results in any kind of dispute, then, it becomes very difficult to resolve such disputes if the parties belong to different jurisdictions. In order to resolve this problem, that is international commercial disputes, international commercial arbitrations are used where a neutral arbitrator following a natural system may try to resolve the dispute amid the parties. Any party who is the signatory of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards can enforce an international arbitration award.

It is now important to understands whether it is beneficial to resolve an international commercial dispute by arbitration in Australia

The Australian Centre for International Commercial Arbitration has established its own international arbitration rules which can be made part of any contract. The main reasons that can be lay down which proves that Australia is the right choice to resolve any international commercial dispute because:

1. A refined procedure law is formulated which is the results of the legislative changes that are bought in the arbitration process of Australia;
2. United Nations Commission on International Trade Law Model Law on International Commercial Arbitration (Model Law) is made part of the dispute system of Australia for international commercial arbitration;

• Te court system is upgraded wherein special judges are assigned to which the international arbitration cases are transferred;

1. Global law firms are becoming the part of the arbitration system of Australia resulting in bring more expertise;
2. The judiciary of the Australia is getting familiar and gaining expertise to the application of the international commercial laws;
3. Detailed procedural rules are framed to administer the process of arbitration.

• The High court of Australia has upheld the decisions of the international arbitration awards. They have also accepted the international arbitration agreements thus confirm the roles of the courts that are needed for supporting arbitration;
• The International Arbitration Act 1974 is the regulation that helps in resolving the internationals commercial arbitration at federal level. the International Arbitration Act 1974 has given effect to the model law 2006 wherein it abide by the mandatory procedural law for all the international commercial proceedings in which Australia has been designated as a place for arbitration;

1. the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958) (New York Convention) and the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention) obligations are also recognized by the International Arbitration Act 1974;

Thus, it is very beneficial for placing arbitration in Australia considering the strong system that is laid down by the International Arbitration Act 1974.

Books/Articles/Journals

Adamu Kyuka, Usman , Theory and Practice of International Economic Law,  (Malthouse Press, 2017).

Bown, Chad, Self-Enforcing Trade: Developing Countries and WTO Dispute Settlement,  (Brookings Institution Press, 01-Feb-2010).

Behrendt , Larissa , Aboriginal Dispute Resolution: A Step Towards Self-determination and Community Autonomy, (Federation Press, 1995).

Mackie,  Karl and Mackie, Karl, A Handbook of Dispute Resolution: ADR in Action, (Routledge, 11-Jan-2013).

Warrier, Vishnu, Arbitration, Conciliation and Mediation, LexisNexis, 2015.

Online Material

Arialilaloblog, Strengths and weakness of WTO, 2018 <https://www.ariafilaloblog.com/blog/strengths-weaknesses-international-trade/>.

Australia, Australia’s Capability In International Commercial Arbitration, 2018, < https://www.austrade.gov.au/ArticleDocuments/1357/ATIC-Arbitration%20Report_APR18_web.pdf.aspx.>.

Findlaw, disadvantages of arbitration, 2018,  <https://adr.findlaw.com/arbitration/arbitration-pros-and-cons.html>

Krueger, Anne, International Economic Organizations, Developing Country Reforms, and Trade,  The National Bureau of National Research <https://www.nber.org/reporter/winter00/krueger.html>.

Maher, Graham Alternative Dispute Resolution: Trends, Traps and Benefits,  2012< https://www.mondaq.com/australia/x/170796/Arbitration+Dispute+Resolution/Alternative+Dispute+Resolution+Trends+Traps+and+Benefits.

VanGrasstek, Craig,  The History and Future of the World Trade Organization, 2013, <https://www.wto.org/english/res_e/booksp_e/historywto_e.pdf>