No Dispute, No Arbitration? Pre-Arbitration Settlements and Awards on Agreed Terms at the International Commercial Arbitration Court

Abstract

The article discusses the legality of arbitral awards on agreed terms issued on the basis of a settlement agreement reached through mediation before the commencement of arbitral proceedings at the International Commercial Arbitration Court at the Ukrainian Chamber of Commerce and Industry. The relevance of the problem is determined by the growing role of mediation in international dispute resolution, the increasing use of hybrid mediation-arbitration mechanisms, and the practical expectation of parties that a mediated settlement may acquire enhanced enforceability if transformed into an arbitral award. The purpose of this article is to establish whether the existence of a dispute constitutes a necessary prerequisite for the commencement and conduct of arbitral proceedings, followed by the rendering of an enforceable arbitral award. The analysis demonstrates that arbitration, by its nature, serves the purpose of resolving existing disputes and that the existence of such a dispute constitutes a fundamental prerequisite for the right to apply to an arbitration and for the exercise of adjudicative function by the arbitration tribunal. A settlement reached through mediation before the commencement of arbitral proceedings effectively eliminates the underlying dispute and, therefore, deprives arbitration of its subject matter. Moreover, an arbitral award rendered in the absence of any dispute may encounter substantial obstacles concerning its legal validity, recognition, and enforcement both under Ukrainian law and the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958. In conclusion, the article argues that the procedure allowing the conversion of a pre-arbitration mediated settlement into an arbitral award on agreed terms fails to guarantee the enforceability expected by the parties. It is therefore proposed that the applicable institutional rules be amended to exclude the possibility of rendering an arbitral award on agreed terms where the parties settled their dispute before the commencement of arbitral proceedings.