Legal Aspects of International Finance

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LEGAL ASPECTD OFINTERNATIONALFINANCE
Table of ContentsINTRODUCTION...........................................................................................................................1MAIN BODY...................................................................................................................................1UNCITRAL Model Law.............................................................................................................1UNCITRAL Arbitration Rules....................................................................................................4New York Convention................................................................................................................6CONCLUSION..............................................................................................................................10REFERENCES..............................................................................................................................11
INTRODUCTIONWith the advent of globalization, foreign trading has become an important aspect of everyeconomy. This revolution created more opportunities as well as challenges for the companies bygiving them a platform to prosper and grow. Thus, amplifying the importance of InternationalFinance especially from the legal point of view. One should understand that international financeis a field of economics dealing with financial cross-border interactions. It includes dynamics offoreign direct investment, exchange currency rate and balance of payments. At times suchinteractions may go haywire resulting in disputes, lack of trust as well as insolvency ofbusinesses. For this purpose, it is crucial to maintain environmental stability in regards tojurisdiction so that the companies involved in such transactions can safeguard their interests.These objectives can be attained by international law which assures order, peace, respect ofrights and protection of natural environment(Born and Born, 2012)1.Over the years, arbitration has grown to be one of the most widely accepted instrumentfor dispute resolution especially in cases relating to commercial contracts and investmentsrelated to technology. An important aspect to look at while studying this concept is due process.Due process is the fair treatment towards a citizen or an entity, to which they are entitled to, bytaking note of charge and passing an impartial judgement.This assessment critically evaluates the importance of due process in the context ofInternational Arbitration primarily focusing on UNCITRAL Model Law, UNCITRAL Rules andNew York Convention. It also provides an introduction to these legal aspects and lists out relatedarticles governing the principle of arbitration. Additionally, it provides some prominent caselaws that evidence or support the importance of due process in maintaining the quality ofarbitration.MAIN BODYUNCITRAL Model LawUNCITRAL Model Law on International Commercial Arbitration was first adopted byUnited Nations Commission on International Trade Law on 21 June, 1985. It was then amendedin 2006 giving a detailed description about the interim measures and the provisions related1Born, Gary, and Gary Born.International arbitration: law and practice(Vol. 307.Alphen aan den Rijn, Netherlands: Kluwer Law International, 2012)1
thereof(Caron and Caplan, 2013)2.It is important to note that this law is not legally binding,however, an individual or entity may incorporate such law as a contractual obligation, if they feelso. The Law has been divided into three parts. Part one includes six Chapters in the form ofarticles and sections. Part Two includes explanatory notes for the law and lastly, part threeincludes recommendations regarding articles, conventions and interpretations thereof.As defined above, due process relates to fair treatment by an unbiased judge in regards tocertain charges recognized for an individual or entity.The General Assemblyof this Law clearlyacknowledges Arbitration as a “method of settling disputes arising in the context of internationalcommercial relations.” In addition to this, the model law also states in its Article 2A, Chapter 1that the interpretation of this law needs to be recognised in order to “promote uniformity in itsapplication and the observance of good faith” across international borders. Thus, one can derivethat the UNCITRAL model law has been implemented with a view to bring about uniformity.Additionally, the Law encourages clear communication among parties to a commercialcontractual obligation(Croft, Kee and Waincymer, 2013)3.In regards to the given topic, due process forms the foundation of this Law. This can beevidenced from Article 9 that any party involved in the arbitration agreement has the right todemand “interim measure of protection and for a court to grant such measure.” This Articleexplains two important criterion. Firstly, it gives the right to safeguard the interest of the party.Secondly, it legally binds the court to grant such a request. This ensures that there is fairtreatment done towards the conflicted parties regardless of their nationality, colour or any othersuch factor.Another evidence of due process is found in this law in Article 10 that allows the partiesto dispute to decide the number of arbitrators they would like to have in order to be heard andensure fairness during their proceedings. In case, they are not able to determine such number, thearticle provisions for three arbitrators regarding any proceedings. This ensures that theparticipants to a dispute are given ample opportunity to put forward their requests and opinionsso that a fair decision can be made regarding the issue.2Caron, David D., and Lee M. Caplan.The UNCITRAL arbitration rules: a commentary(Oxford University Press, 2013)3Croft, Clyde, Christopher Kee, and Jeff Waincymer.A guide to the UNCITRALArbitration Rules(Cambridge University Press, 2013)2
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