Assignment Sample on LLM M31613 – International Commercial and Investment Arbitration
Topic: Critically discuss the issues of independence and impartiality of arbitrators.
1. Introduction
The attributes of independence and impartiality of arbitrators can ensure significant transparency and accountability in the area of arbitration considering business perspectives. With regards to this concern, the present assignment will pay attention to highlighting the independence of commercial operations from a business perspective along with the business regulatory framework that is utilised for corporate governance. Business regulatory legislations will also be highlighted in this concern along with the consequences of having a lack of regulations. The process of arbitration will also be defined clearly by summarising the role of impartial arbitration along with disclosing valuable arbitration legislations.
2. Discussion
2.1 Independence of commercial operations
Independence in commercial operations can provide a distinct impact upon a business. The topmost concern in this context reflects the lack of legislative attributes to be followed in each business operation and steps taken by an organisation. As a result of this, greater imbalance and impartiality could be recognised within the organisational business operations considering the area of product pricing strategy, customer service, and others[1]. From this viewpoint, complete independence over commercial operations might bring in negative brand reputation to an organisation based on which their transparency could be affected negatively.
However, the independence of commercial operations is also required with regards to ensuring independent proceedings of an organisation and business activities. In this context, the business could not be recognised as a state-owned enterprise where the business ownership is provided to its relational director. However, adequate legislative attributes are required to be associated along with ensuring the independence of commercial operations in a country[2]. This factor can remove different problematic concerns that might generate through the independence of commercial operations in an organisation. In this manner, the business might be able to progress by complying with valuable legal constraints in a particular market.
2.1.1 Business regulatory framework of corporate governance
Corporate governance is usually a regulatory framework that governs the activities of the enterprises that are eventually controlled and directed in order to abstain from manipulating or violating the consumers and employees’ rights. Several rules and regulations are formed which need to be followed by the companies, abstaining from adhering to those will hold the company accountable for violation of the law [3]. Corporate governance is used by every country in order to regulate the activities of different companies in that country. Without the governing, the companies can violate several factors such as not paying the employees appropriately, making the employees work overtime without paying them extra for the additional hours worked, not maintaining the standards as per the pricing of the products and others. These frameworks help to align the activities of an organization with the required laws.
Corporate governance is used in order to help build an environment that can be trusted and furthermore, transparency and accountability between the consumers and the companies must be there for fostering the long-term stability and integrity of the business[4]. Additionally, the government ensures that every individual of the business is following a transparent process of decision making in order to protect the interest of the stakeholders such as managers, suppliers, employees and others.
Implementing corporate governance in an organisation has a detrimental impact on the decision-making process adopted by the company as the corporate governance framework is responsible for ensuring the welfare of the employees. Furthermore, it helps the companies to deliver long term success and economic growth through maintaining transparency which helps to increase the trust of the consumers and simultaneously helps to retain employees into the company. Corporate governance helps to maintain the confidence of the investors of the companies which simultaneously impacts on raising the capital effectively and efficiently of the company [5]. The trust in the company in the market also benefits it on the part of share prices. Furthermore, the control over the management and the information system gets improved which helps in decreasing the management risks and security breaches. Additionally, governance helps or guides the company to set its goal according to the predetermined instruction of the law which eventually results in minimisation of wastes, risks, corruption and mismanagement. A strong brand image can easily be fostered among the consumers increasing the stability of the company and also helping to be more resilient.
Corporate governance can sometimes face severe drawbacks in terms of separation of management and ownership. In several cases, it has been seen that the vote for a particular matter in a company is given by a proxy of the shareholders. However, the owners of the business who can oversee or forecast the events can differ from what the management such as the shareholders of the company has to vote regarding that matter. This distinction between the owners and the management can create a conflict that can result in separation[6]. Furthermore, the corporate insiders such as the managers, executives and employees can trade illegally inside the company without giving the knowledge about it to the outside world or the shareholders of the company which can create a huge issue among the shareholders and the insiders of the company impacting their revenue and image.
2.1.2 Business regulatory legislation
Different business regulatory legislations are followed across the UK market that has been providing significant transparency and fairness in the countrywide business operations. The topmost concern, in this case, highlights the consideration of the Equality act 2010[7]. This law has been significant in terms of conceptualising gender equality within the workplace along with removing the pay gap between male and female employees. The Health and Safety at Work 1974 is also abided across the UK market that has been signifying occupational health and safety for potential workers and employees in the workplace. This law is applied as a regulatory reinforcement to ensure workplace welfare.
Fair work act 2009 is also followed in the UK as another significant regulatory framework. This law is important in terms of establishing the basic employment rights of an individual[8]. The application of this legal attribute is centered on relational basic aspects required by an individual including evidence of long working hours, holidays, break from work, and others. It is also applicable for avoiding unfair dismissal of workers.
Distinctive labour laws and regulations are eventually followed across the UK market that has been supporting and establishing basic rights of workers and labours considering the workplace additional benefits. It has been supported with different legal instincts that highlight several attributes including employment rights, minimum wage, employment relations and others. These legal constraints highlight the Employment Rights Act 1996, the National Minimum Wage Act 1998, the Employment Relations Act 1999, the Maternity and Parental Leave regulations 1999, Protection of Employment Regulations 2006 and others[9]. These legal attributes have been significant to ensure relational prevention of discrimination regarding the provision of adequate basic employment rights and benefits from the perspective of an employee.
Apart from that, several important legislations can also be notified across the UK market that has been outlining valuable business-related legal aspects concerning the maintenance of fair and transparent business operations. For example, the context of the Bribery Act 2010 can be considered that covers criminal laws related to any act of bribery[10]. Moreover, employee work-life balance is also maintained in the UK market with Working Time Regulations 1998 which is applicable for making the employees follow particular rules and regulations with the entitlement of working hours and holidays.
Data protection has emerged as another concern over the global market that has been affecting different business organisational deputation to a fair extent. In this regard, the Data Protection Act 2018 has been followed in the UK market. Moreover, the General Data Protection Regulations (GDPR) are eventually followed by the business that is operating in the UK[11]. The significance and application of this law highlight the regulation of storing and protecting valuable customer and employee information.
2.1.3 Lack of regulations
Lack of regulation or nonregulation is the absence of rules and policies that are being imposed by the government in order to operate the business systematically. Through the help of regulation in the business operation, it focuses on certain sets of rules and regulations which should be maintained and controlled[12]. Organizations should have their own policies and regulations to convey their values and work techniques to their employees. Moreover, a lack of regulation in an organisation can severely impact the environment of the company. Ethical grounds are the major sector that gets hampered due to nonregulation. Furthermore, it sets a very negative thought process for the employees and it becomes difficult as well to operate in the market with achieving desired outcomes successfully[13]. Lack of regulation can influence the hiring process, health and safety of the workforce, ethics code of the organisation, increased discrimination and harassment and most importantly reduced importance on training and development. The risk management of the organisation will slowly start to vanish which will ultimately lead to huge financial losses along with increased errors, frauds and data breaches across the organisation. The lack of rules and regulations can entirely transform the business operation which later influences the relationship with other shareholders and stakeholders as well[14].
Furthermore, a lack of regulation in the business organisation will directly impact the social relationships of the organisation. The way of business operations is evolving and it has been expected from the organisation that they will follow all the rules and regulations along with following sustainability practices in their organisations[15]. Taking care of the social and environmental is the foremost responsibility of the organisation, however, due to nonregulation, the organisation will lag behind in meeting up the expectations of the consumers. Furthermore, it will reflect a negative image over the consumers which will eventually come up with several issues and challenges such as decreased brand recognition, uncertainty about the future operations, maintaining reputation, providing better customer services and many more[16]. Moreover, violating and not having regulation will allow occurring several barriers in smooth business operations. Following the regulation will effectively help the organisation to sustain into the marketplace along with possible chances to expand their business globally. Furthermore, rules and regulations guide the business towards the desired future outcomes.
2.2 Impartial Arbitration
2.2.1 Role of impartial arbitration
Arbitration is a process that helps in resolving disputes between two buy fairly judging the contract that has been initiated between them. The session that is overseen by an arbitrator makes an assessment of the claims made by both the parties and based on the evidence that has been provided by them the arbitrator comes up with the decision that might also include financial rewards for a particular party. The financial rewards are added as a means to minimise or compensate for the financial damages one particular party has faced due to the dispute between them however the provision of financial or monetary rewards is not necessary in most cases[17].
Furthermore, if it is seen that arbitration between both parties is necessary then no judicial process can be initiated or judicial review can be called for due to the presence of restricted situations. On the other hand, the party that wins the claim in the process of arbitration can seek the assistance of the court of law which can further enforce the judgement that has been passed by the arbitrator[18]. Therefore, it can be stated that arbitrators act as a neutral body between two entities that are involved in a dispute who act as a referee in the process of decision making in the overall arbitration process. However, the arbitration agreement and that has been formed by both parties is the set of regulations that governs the arbitrator. Furthermore, there are also bodies such as the London court of arbitration and if the arbitrator is a part of such an association, then they are also confined within the regulations and ethical guidelines that are provided by such institutions. Apart from that, it has also been seen that one of the most important aspects that arbitrators regulate is the facilitation of communication between both parties so that a collaborative and engaging session could be achieved. This helps the arbitrator to come up with quick resolutions that serve the purpose of resolving the dispute without much delay.
2.2.2 Important in a particular case
Arbitration is often the most effective alternative for resolving disputes between parties since it does not necessitate any long procedures and takes much less time to fix the dispute at a cheap cost when compared to other legal systems. The parties have the opportunity, depending on the nature of the issue, to select their own arbitrator based on their ability to determine the case based on their competence. The arbitration process in international business is much more relevant than any other. This is due to the fact that international business is are much more formal straight forward and do not have any complications which help in resolving the disputes in transactions in a fast and efficient manner[19]. The proceedings must be conducted with speed, confidence, adaptability, and confidentiality. If a resolution is achieved, the arbitrator will create a settlement agreement. Thus, the function of the arbitrator is critical, and it necessitates a one-of-a-kind mix of experience, expertise, and competence. Arbitration provisions are increasingly widespread in consumer and commercial contracts, attesting to their value as a dispute settlement tool.
2.2.3 Arbitration legislations
In the UK the Arbitration Act 1996 governs all the arbitration in the company. The regulations of this section are based on the following fundamentals, and they must be interpreted as it is.
(a) The purpose of arbitration is to obtain a justified settlement of disputes by an impartial tribunal without any delay or expense[20]
(b) The sides should have the freedom to choose on how their disagreements are resolved, in case any such protections are required in the public interest
(c) In matters controlled by this Part, the court should not act immediately except as provided by this section of the act
This act also creates a provision for the arbitral tribunal which has the following guidelines that are necessary to be followed by both parties
(1) The parties have the free will to decide on the number of arbitrators who will comprise the tribunal, as well as whether an umpire or chairman appointed[21].
(2) Unless the parties agree otherwise, an arrangement that the number of arbitrators shall be two or any other even number shall be interpreted as requiring the appointment of an additional arbitrator as the tribunal’s chairman.
(3) If agreement cannot be achieved on how many arbitrators shall be present then the tribunal shall be composed of a sole arbitrator[22].
3. Conclusion
Based on the overall analysis, it has been undertaken that both independence and impartiality is important while considering arbitration. With respect to this, the report will highlight the importance of independence in commercial operation along with evaluating the business regulatory framework. Adding to this, the importance and the application of business regulatory legislation is also discussed efficiently. Rules and regulation are the most important sectors that should be followed by the organisation and in this relation, the issues and challenges are analysed that are being emerged due to lack of regulations. Furthermore, with respect to arbitration, the role and importance along with its legislation will be presented briefly.
4. References
Ajibo, C.C. and Ajibo, K.I., (2019). Mandatory versus discretionary rule dichotomy in the harmonization of corporate governance codes: Lessons for Nigeria. Journal of African Law, 63(3), pp.385-411.
Bhagat, S. and Bolton, B., (2019). Corporate governance and firm performance: The sequel. Journal of Corporate Finance, 58, pp.142-168.
Bookman, P.K., (2019). The Arbitration-Litigation Paradox. Vand. L. Rev., 72, p.1119.
Born, G.B., (2021). International arbitration: law and practice. Kluwer Law International BV.
Bui, T.D., Tsai, F.M., Tseng, M.L. and Ali, M.H., (2020). Identifying sustainable solid waste management barriers in practice using the fuzzy Delphi method. Resources, conservation and recycling, 154, p.104625.
Croner, (2020). A Comprehensive List of Employment Legislation in the UK [Online]. Available at: <https://croner.co.uk/resources/employment-law/legislation-list/> [Accessed 5 November 2021]
Kovermann, J. and Velte, P., (2019). The impact of corporate governance on corporate tax avoidance—A literature review. Journal of International Accounting, Auditing and Taxation, 36, p.100270.
Legislation.gov.uk, (2021). Arbitration Act 1996 – General guidelines [Online]. Available at: < https://www.legislation.gov.uk/ukpga/1996/23/section/1> [Accessed 5 November 2021]
Legislation.gov.uk, (2021). Arbitration Act 1996 – The arbitral tribunal. [Online]. Available at: <https://www.legislation.gov.uk/ukpga/1996/23/section/15> [Accessed 5 November 2021]
Lopes, S., Eccles, R., Horton, A., Williamson, R., Dixon, A., Sekine, Y., Heap, N., Rink, A., Giles, C and Green, N., (2020). Doing Business in the UK (England and Wales): Overview [Online]. Available at: <https://uk.practicallaw.thomsonreuters.com/5-500-5090?transitionType=Default&contextData=(sc.Default)&firstPage=true> [Accessed 5 November 2021]
Muda, I., Maulana, W., Sakti Siregar, H. and Indra, N., (2018). The analysis of effects of good corporate governance on earnings management in Indonesia with panel data approach. Iranian Economic Review, 22(2), pp.599-625.
O’Connor, D., Hou, D., Ok, Y.S. and Lanphear, B.P., (2020). The effects of iniquitous lead exposure on health. Nature Sustainability, 3(2), pp.77-79.
Reichert, P., Hudon, M., Szafarz, A. and Christensen, R.K., (2019). Crowding-in or Crowding-out? How Subsidies Signal the Path to Financial Independence of Social Enterprises. Perspectives on Public Management and Governance, 4(3), pp.291-308.
Steen, M. and Nauta, J., (2020). Advantages and disadvantages of societal engagement: a case study in a research and technology organization. Journal of Responsible Innovation, 7(3), pp.598-619.
Stevano, S., Ali, R. and Jamieson, M., (2021). Essential for what? A global social reproduction view on the re-organisation of work during the COVID-19 pandemic. Canadian Journal of Development Studies/Revue canadienne d’études du développement, 42(1-2), pp.178-199.
Takahashi, W., (2021). Central Bank Independence in a Changing Environment. In Monetary Policies in the Age of Uncertainty (pp. 13-42). Springer, Singapore.
Thomson Reuters, (2021). Unfair dismissal under the Fair Work Act [Online]. Available at: <https://uk.practicallaw.thomsonreuters.com/w-001-5077?transitionType=Default&contextData=(sc.Default) > [Accessed 5 November 2021]
van de Brake, H.J., Walter, F., Rink, F.A., Essens, P.J. and van der Vegt, G.S., (2020). Benefits and disadvantages of individuals’ multiple team membership: The moderating role of organizational tenure. Journal of Management Studies, 57(8), pp.1502-1530.
Vasani, B.S., (2017). II. 55 London Court of International Arbitration (LCIA). In Elgar Encyclopedia of International Economic Law (pp. 311-312). Edward Elgar Publishing.
[1] Reichert, P., Hudon, M., Szafarz, A. and Christensen, R.K., 2019. Crowding-in or Crowding-out? How Subsidies Signal the Path to Financial Independence of Social Enterprises. Perspectives on Public Management and Governance, 4(3), pp.291-308.
[2] Takahashi, W., 2021. Central Bank Independence in a Changing Environment. In Monetary Policies in the Age of Uncertainty (pp. 13-42). Springer, Singapore.
[3] Bhagat, S. and Bolton, B., (2019). Corporate governance and firm performance: The sequel. Journal of Corporate Finance, 58, pp.142-168.
[4] Muda, I., Maulana, W., Sakti Siregar, H. and Indra, N., 2018. The analysis of effects of good corporate governance on earnings management in Indonesia with panel data approach. Iranian Economic Review, 22(2), pp.599-625.
[5] Kovermann, J. and Velte, P., (2019). The impact of corporate governance on corporate tax avoidance—A literature review. Journal of International Accounting, Auditing and Taxation, 36, p.100270.
[6] Ajibo, C.C. and Ajibo, K.I., (2019). Mandatory versus discretionary rule dichotomy in the harmonization of corporate governance codes: Lessons for Nigeria. Journal of African Law, 63(3), pp.385-411.
[7] Lopes, S., Eccles, R., Horton, A., Williamson, R., Dixon, A., Sekine, Y., Heap, N., Rink, A., Giles, C and Green, N., 2020. Doing Business in the UK (England and Wales): Overview [Online]. Available at: <https://uk.practicallaw.thomsonreuters.com/5-500-5090?transitionType=Default&contextData=(sc.Default)&firstPage=true> [Accessed 5 November 2021]
[8] Thomson Reuters, 2021. Unfair dismissal under the Fair Work Act [Online]. Available at: <https://uk.practicallaw.thomsonreuters.com/w-001-5077?transitionType=Default&contextData=(sc.Default) > [Accessed 5 November 2021]
[9] Croner, 2020. A Comprehensive List of Employment Legislation in the UK [Online]. Available at: <https://croner.co.uk/resources/employment-law/legislation-list/> [Accessed 5 November 2021]
[10] Croner, 2020. A Comprehensive List of Employment Legislation in the UK [Online]. Available at: <https://croner.co.uk/resources/employment-law/legislation-list/> [Accessed 5 November 2021]
[11] Croner, 2020. A Comprehensive List of Employment Legislation in the UK [Online]. Available at: <https://croner.co.uk/resources/employment-law/legislation-list/> [Accessed 5 November 2021]
[12]Stevano, S., Ali, R. and Jamieson, M., (2021). Essential for what? A global social reproduction view on the re-organisation of work during the COVID-19 pandemic. Canadian Journal of Development Studies/Revue canadienne d’études du développement, 42(1-2), pp.178-199.
[13] O’Connor, D., Hou, D., Ok, Y.S. and Lanphear, B.P., (2020). The effects of iniquitous lead exposure on health. Nature Sustainability, 3(2), pp.77-79.
[14] van de Brake, H.J., Walter, F., Rink, F.A., Essens, P.J. and van der Vegt, G.S., (2020). Benefits and disadvantages of individuals’ multiple team membership: The moderating role of organizational tenure. Journal of Management Studies, 57(8), pp.1502-1530.
[15] Bui, T.D., Tsai, F.M., Tseng, M.L. and Ali, M.H., (2020). Identifying sustainable solid waste management barriers in practice using the fuzzy Delphi method. Resources, conservation and recycling, 154, p.104625.
[16] Steen, M. and Nauta, J., (2020). Advantages and disadvantages of societal engagement: a case study in a research and technology organization. Journal of Responsible Innovation, 7(3), pp.598-619.
[17] Born, G.B., (2021). International arbitration: law and practice. Kluwer Law International BV.
[18] Vasani, B.S., (2017). II. 55 London Court of International Arbitration (LCIA). In Elgar Encyclopedia of International Economic Law (pp. 311-312). Edward Elgar Publishing.
[19] Bookman, P.K., 2019. The Arbitration-Litigation Paradox. Vand. L. Rev., 72, p.1119.
[20] Legislation.gov.uk, 2021. Arbitration Act 1996 [Online]. Available at: < https://www.legislation.gov.uk/ukpga/1996/23/section/1> [Accessed 5 November 2021]
[21] Legislation.gov.uk, 2021. Arbitration Act 1996- The arbitral tribunal. [Online]. Available at: <https://www.legislation.gov.uk/ukpga/1996/23/section/15> [Accessed 5 November 2021]
[22] Legislation.gov.uk, 2021. Arbitration Act 1996- The arbitral tribunal. [Online]. Available at: <https://www.legislation.gov.uk/ukpga/1996/23/section/15> [Accessed 5 November 2021]
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