Globalization is the new buzz word and the lingua franca of international business. With the numerous advantages flowing through globalization, this new process is taking a new shape by getting more critical and unyielding. To elucidate further on its uphill spin, an onlooker can observe its increasing complexity through features such as the free market economy, the growing volume of international trade and the settlement of disputes between parties engaged in commercial activities across national boundaries. In this respect, the development and growing significance of international commercial arbitration over the last thirty years has strived hard to satisfy the always innovative and challenging practical needs of the international business community. Parties to international business transactions tend to accommodate arbitration as a speedy, flexible and secure method of dispute resolution. Nevertheless, international arbitration is in a position to withstand its own risks and loopholes. Within the arbitration region, arbitration proceedings involving a state as a party are judged under a very specific category. Indeed, history has demonstrated that states have a natural tendency to retain and maintain their sovereignty especially with regard to their judicial sovereignty. This tendency does not automatically eclipse when states agree to adopt any of the dispute resolution mechanisms such as arbitration. Moreover, each states' expectations differs from those of private parties who resort to arbitration. It should be noted that private parties who resort to arbitration is considered as a tantamount to escape from the strict requirements of litigation, whereas for states it is a tantamount to a loss of liberty and power.
[...] Moreover, states' expectations differ from those of private parties who resort to arbitration. Indeed, for private parties the resort to arbitration is tantamount to an escape from the strict requirements of litigation, whereas for states it is tantamount to a loss of liberty and power[3]. As a matter of fact, the specific status that a state may claim at every stage of the arbitral process, be it prior to the arbitration proceedings or subsequent to the rendering of an award, generates a whole range of complications that often endanger the effective resolution of a given dispute. [...]
[...] The contractual relation between Noga and the Russian Federation subject of the underlying arbitration. In December 1990, Noga entered into several supply contracts to provide $550 million worth of food and consumer goods to foreign trade agencies of both the Union of Soviet Socialist Republics the predecessor to the Russian Federation) and the Federative Socialist Soviet Republic of Russia - a constituent republic of the USSR). The Russian parties had difficulties in financing those contracts and when the initially contemplated third-party financing failed, Noga agreed to finance them in part. [...]
[...] From Russia with Love: Lessons of the Noga Arbitration case[1] Introduction I. The Noga case: an illustration of the risk of an unenforceable award against a state. The Noga case: facts and procedure The contractual relation between Noga and the Russian Federation subject of the underlying arbitration The procedural setting. Noga's basis for action and the issues to be examined by the Court 1. Noga's legal framework for confirming the phase I award: the New York Convention 2. The problem to be solved: can an arbitral award be enforced against an entity that was neither a signatory state to the arbitration agreement nor a party to the arbitration proceedings? [...]
[...] It is only when a state-created entity functions as an “arm-of-the- state” that it takes on the state's Eleventh Amendment immunity. For an illustration of the application of this doctrine: Mancuso v. New York State Thruway Authority F.3d 289 (2d Cir. 1996). For another example see: Germany, Bundesgerichtshof, Decision of 4 October 2005, Franz J. Sedelmager v. Russische Föderation, VII ZB 8/05, ASA Bull. 1/2006, p.17. The United States District Court for the Southern District of New York had already the opportunity to render a new judgement in the Noga saga (Compagnie NOGA d'Importation et d'exportation S.A. v. [...]
[...] Indeed, following the reasoning described above, the Judges held that under either international law, Russian law or federal common law, the Government of the Russian Federation should be treated as the same party in the confirmation proceeding. Under either of these bodies of law, no meaningful legal distinction could be drawn between the nation and its political organs. In other words, for the purposes of this case, the internal separations between the nation's entities were deemed to be irrelevant. Russian Law According to the Russian Federation, the application of private international law in the present case mandated application of Russian law. Consequently, the Judges examined the provisions of the Russian Constitution. [...]
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