What is arbitration ?
Arbitration is a procedure in which a dispute is submitted, by agreement between the parties, to one or more arbitrators who deliver a binding decision. Arbitration can only take place if both parties have agreed. In the case of potential disputes arising from a contract, the parties can choose in advance to submit a dispute to arbitration, under the Arbitration Rules of the Chamber of Commerce of Luxembourg by inserting an arbitration clause to this effect in the contract (see document attached below). Even in the absence of such a clause, the parties are at liberty to have recourse to arbitration once a dispute arises by having recourse to an ad hoc arbitration (see document attached below). Any dispute can potentially be dealt with by arbitration. In practice, arbitration is more particularly justified by one or more of the following reasons:
- the dispute has an international dimension;
- the amounts involved are of a certain size;
- the dispute has a certain technical complexity;
- the parties want a certain amount of confidentiality.
Luxembourg as an arbitration centre
The choice of Luxembourg as an arbitration centre is justified by the numerous advantages of the country.
The main advantages of the country are its neutrality, political and social stability, strategic location in Europe (half way between the London-Milan axis and the Paris-Frankfurt axis) and the quality of transport infrastructure, logistics, telecommunications (less than a two-hour flight from the main European capitals). In addition the multilingualism of its citizens (French, German, English, Luxembourgish) as well as the multi-cultural environment (understanding of Germanophone et Francophone cultures) favours an open and international attitude and a recognised aptitude for managing conflicts and reconciling opposing positions in a spirit of compromise and neutrality, thereby favouring the maintenance of commercial relations between the parties. Finally, an economy which is diversified but which also specialises in certain high technology fields, ensures the presence of technical experts in the various fields. The existence of an international and world recognised financial centre guarantees a spirit of innate confidentiality as well as financial expertise.
The Arbitration Centre of the Chamber of Commerce of the Grand-Duchy of Luxembourg
The Chamber of Commerce of the Grand-Duchy of Luxembourg has its own Arbitration Centre with its own Arbitration Rules (see document attached below).
The Arbitration Centre of the Chamber of Commerce of the Grand-Duchy of Luxembourg was created in 1987 to provide an alternative to court rulings on disputes which often prove to be too long, expensive and unsuited to the technical and complex issues of the world of business. The Arbitration Centre operates under the authority of an Arbitration Council which has five members including the president of the National Luxembourg Committee of the International Chamber of Commerce (ICC), as president, the Luxembourg member of the Arbitration Court of the CCI, the President of the Bar of Luxembourg, the director general of the Chamber of Commerce and the President of the Institute of Auditors ( l'Institut des Réviseurs d'Entreprises - IRE).
Its role is to organise and monitor the good operation of arbitration procedures before the Arbitration Centre, according to the conditions laid down in the Arbitration Rules of the Centre.
Since its creation the Arbitration Centre has been constantly enriched by the experience acquired in the cases submitted to it.
There are several advantages of arbitration compared to classical legal proceedings:
- confidentiality and discretion: unlike in theory public legal proceedings, the Arbitration Centre guarantees the confidentiality of the arbitration, thus ensuring the non-disclosure of even the existence of the dispute and the protection of any know-how potentially in dispute;
- speed the maximum time limit within which the arbitrator(s) must deliver their ruling is six months;
- legal security: the arbitration ruling can be rapidly implemented in all the 145 countries of the world which signed the New York Convention of 10 June 1958 for the recognition of the implementation of foreign arbitration rulings;
- professionalism of arbitrators: faced with disputes which are becoming more and more complex, state judges called on to give a ruling on a dispute do not necessarily possess the required specialised competences. In arbitration proceedings, the parties have the possibility either to choose themselves the arbitrator(s) or to entrust the Arbitration Centre with making a selection from among people with every guarantee of professionalism in the specific field which is the subject of the dispute ;
- a single proceeding: in a dispute with an international dimension, there is a risk of a multiplication in long and costly legal proceedings. Arbitration is confined to a single proceeding and the legislation determined by the parties;
- less expensive: the cost of often very complex legal proceedings can be high. In comparison, arbitration is generally less expensive.
The Chamber of Commerce can provide meeting rooms with translation booths.