INTRODUCTION
Recourse to arbitration helps improve international economic relations, inasmuch as, provision for effective dispute resolution mechanism facilities the conduct of trade and investment.1
Arbitration is an effective way of obtaining a final and binding decision on a dispute, or series of disputes, reached by way of an agreement between the parties, rather than coercive power of the State.2 Arbitration is simple, informal and essentially private system of dispute resolution. The most important aspect of arbitration is flexibility of procedure. Arbitration has been accepted worldwide as the principal method of resolving international disputes for two primary reasons: neutrality and enforcement. As to “neutrality”, international arbitration gives the parties an opportunity to choose a “neutral” place for resolution of their disputes and to choose a “neutral” tribunal. As to “enforcement”, an international arbitration, if carried through to the end, leads to a decision which is enforceable against the losing party, not only in the place where it is made, but also internationally, under the provisions of such treaties as the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 also commonly referred to as “the New York Convention”.3
International arbitration has become the principal method of resolving disputes between States, individuals, and corporations in almost every aspect of international trade, commerce and investment. The established centres of arbitration report increasing activity, year on year and new arbitration centres have been set up to catch this wave of new business.4 In fact, the Resolution of the General Assembly of the United Nations begins by recognising “the value of arbitration as a method of settling disputes arising in international commercial relations”.5
The term “international arbitration” is used to denote arbitrations which, in some way, transcend national boundries.6 However, the international nature of arbitration does not mean that parties must necessarily be of different nationalities. By virtue of its object, the contract can nevertheless extend beyond national borders, when for example, a contract is concluded between two nationals of the same State for performance in another country, or when it is concluded between a State and a subsidiary of a foreign company doing business in that State.7
International commercial arbitration is a hybrid. It begins as a private agreement between the parties. It continues by way of private proceedings, in which the wishes of the parties play a significant role. Yet it ends with an award that has binding legal force and effect, and which, on appropriate conditions, the courts of most countries of the world will recognise and enforce. In short, this essentially private process has a public effect, implemented with the support of public authorities of each State and expressed through that State’s national law. This interrelationship between national law and international treaties and conventions is of vital importance to the effective operation of international arbitration.2 In other words, practice of resolving disputes by international arbitration works effectively because it is held by a complex system of national laws and international treaties8.
Aviation sector is not immune to the increasing phenomenon of use of arbitration as a popular tool for dispute settlement. Of late, significant increase in, and development of, activities in the aviation sector has also increased the possibility of legal conflicts, especially in view of the fact that high commercial interests are at stake. For the purposes of the present discussion, focus shall be on inter-State and business aviation disputes.
In the aviation domain, arbitration is increasingly been employed as the most popular dispute resolution mechanisms. The relevant provisions in this regard are found in numerous bilateral and multilateral instruments of international law. Different advantages offered by the process of dispute resolution through arbitration, as discussed above, have been submitted for the use of arbitration in this domain.
An important characteristic of aviation sector, which is relevant in the present context, is the diverse nature of aviation disputes occasioned by its international character.
Use of arbitration for resolution of international civil aviation legal disputes has gained a special position primarily as a result of two perspectives9: first, it is used as a standard dispute resolution mechanism in several bilateral agreements and second, it has, in practice, achieved fruitful results, namely, in the Belgium-Ireland Arbitration (1981)10. Additionally, increasing use of arbitration for resolution of disputes can be found in various contractual agreements entered inter se between corporations working in the aviation sector, as also between nation States and multinational corporations.
With an attempt to explore the subject in a constructive manner, this paper is divided into three parts, respectively offering a brief historical perspective of dispute resolution in the aviation sector through arbitration; observing the role of arbitration as the primary source of dispute resolution in the aviation sector; and finally critically analysing the emerging trends in international aviation arbitration.
DISPUTE RESOLUTION THROUGH ARBITRATION IN THE AVIATION SECTOR: HISTORICAL PERSPECTIVE
Though aviation is a highly regulated sector, with multiple regulatory sources9, this sector has the tendency of triggering substantial number of disputes in view of significant integration of economic interest and international prestige.
The settlement of international aviation disputes has a long history. Prior to the year 1944, three multilateral instruments were signed, which contained provisions for settlement of international aviation disputes through arbitration: the International Convention for Air Navigation signed at Paris, France on 13-10-191911, the Ibero-American Convention on Air Navigation signed at Madrid, Spain on 1-11-1926 and the Pan American Convention on Commercial Aviation signed at Havana, Cuba on 20-2-192812. Additionally, some bilateral agreements were also executed which contained provisions for settlement of international aviation disputes through arbitration.13
The Conference on International Civil Aviation held in Chicago in the year 1944 led to the signing of Convention on International Civil Aviation, also popularly referred to as the Chicago Convention, 1944 (“the Chicago Convention”)14. The Chicago Convention, which is also termed as the Magna Carta of international aviation, constitutes the primary governing law of international civil aviation, with its most significant achievement being the establishment of the International Civil Aviation Organisation (“the ICAO”). The ICAO is a specialised agency of the United Nations which manages the administration and governance of, and adjudicates legal disputes concerning the interpretation and application of, the Chicago Convention. Additionally, the ICAO Council has been designated by the ICAO Assembly to act as an arbitral body for settlement of disputes between contracting States, relating to international civil aviation matters, when expressly requested to do so by all parties to such dispute15.
Dispute settlement process under the said Chicago Convention is set out in Articles 84 to 88, contained in Chapter XVIII of the Convention titled “Disputes and Default”. Article 84 of the Chicago Convention16 provides for a three-tier dispute settlement mechanism i.e. negotiation between the States concerned, decision by the ICAO Council and appeal to the International Court of Justice or ad hoc Arbitral Tribunal. For the present purpose, it is pertinent to mention that relevant part of Article 84, which provides that any contracting State may appeal from the decision of the ICAO Council to an ad hoc Arbitral Tribunal agreed upon with the other parties to the dispute, or to the Permanent Court of International Justice, has to be read in conjunction with Article 85 of the Chicago Convention17, which deals with eventualities where contracting parties are not able to agree on the choice of the Arbitral Tribunal provided for in Article 84, and sets out the procedure to be applied in such cases. In terms of Article 86 of the Chicago Convention18, decision rendered by the Arbitral Tribunal shall be final and binding on the parties.19
The Chicago Convention was followed by signing of the International Air Services Transit Agreement, 1944 and the International Air Transport Agreement, 1944, which were ratified by a total of 32 countries. In terms of Article 66 of the Chicago Convention20, the ICAO has jurisdiction over settlement of disputes under the said agreements. The provisions contained in Chapter XVIII (Articles 84 to 88) of the Chicago Convention have application to disputes arising under the said agreements21. However, the efficacy of the procedure set out in the Chicago Convention, as discussed above, has constantly been questioned. In fact, since the entry into force of the Chicago Convention on 4-4-1947, till 2015, only five disputes22 were submitted to the ICAO Council for adjudication23 and in none of the five cases did the ICAO Council render a verdict on merits of the case. This has been followed up by two other references i.e. Brazil v. United States of America (2016) and Qatar v. Egypt, Bahrain and United Arab Emirates (2017). Additionally, since the entry into force of the Chicago Convention, no dispute has been referred to the ICAO Council for arbitration24.
Though several reasons were attributable for the minuscule number of disputes which were referred to the ICAO Council for resolution and no dispute having been referred to the ICAO Council for arbitration, however, general consensus amongst scholars is that the primary reason for the same was political composition of the ICAO Council, lack of independence and lack of legal and technical expertise23. Some scholars have also described the mechanism of dispute resolution provided in the Chicago Convention as a “failure”25.
Similarly, the Convention on Damage by Foreign Aircraft to Third Parties on the Surface, 1952, also popularly referred to as “the Rome Convention”, which was entered into under the aegis of the ICAO, provided for settlement of disputes through arbitration26. However, the said provisions were more optional, than mandatory, in nature.
Consequently, States have refrained from submitting disputes for resolution to the ICAO Council under Article 84 of the Chicago Convention23. Additionally, though initially some bilateral agreements between individual States designated the ICAO Council as the dispute settlement body, however, as on date, such bilateral agreements have predominantly renounced reference to the ICAO Council as an adjudicatory forum27.
This consistently led to entering into of several bilateral agreements between individual States, dealing with various aspects of international civil aviation, wherein arbitration was explicitly chosen as the dispute resolution mechanism between the parties28. In fact, study of several bilateral agreements has pointed to the fact that arbitration, as a medium of dispute resolution in the international aviation sector, has been prioritised since the year 196229.
The case of United States of America v. France (1963) was the first aviation dispute under a bilateral agreement to be resolved through ad hoc arbitration30. The dispute related to the interpretation of the traffic rights established under the United States of America-France Air Transport Services Agreement, 1946. The United States of America invoked the compulsory arbitration clause under Article X of the said bilateral agreement31. This particular matter was considered by the parties to be a symbolic test for arbitration32 and this case signified the importance of arbitration process as an effective means of dispute resolution in the aviation sector. In the course of time, five other cases were sought to be resolved through ad hoc arbitration.33 Five out of the said six cases were decided on merits.
In addition to the above, in relation to inter-State disputes, the Dispute Settlement Body of the World Trade Organisation may have jurisdiction over certain aviation disputes, pursuant to the General Agreement on Trade in Services (GATS), which governs air transport services, excluding traffic rights and services directly related to traffic. While private parties do not have a right to directly initiate proceedings before the Dispute Settlement Body, they can possibly explore indirect access through established complaint mechanisms.
In the recent times, with the advent of bilateral investment treaties in the aviation sector, there has been a surge in dispute settlement arrangements, providing direct access for private investors to arbitration process for settlement of investment related disputes with host State34.
ARBITRATION AS THE PRIMARY SOURCE OF DISPUTE RESOLUTION IN THE AVIATION SECTOR
Generally speaking, six common reasons are listed for disputes in the international civil aviation sector:
(a) restrictions in airline marketing, ticket selling and currency remittance;
(b) dumping of air transport services;
(c) restricted access to travel agents and computer reservation systems;
(d) discrimination concerning frequency and capacity and other operating restrictions;
(e) discriminatory charges for Air Traffic Control (ATC) and Air Traffic Navigation (ATN); and
(f) ground handling restrictions and unfair taxes.
The abovementioned causes for disputes in the international civil aviation sector can be divided into two major categories: commercial disputes and non-commercial disputes. Commercial disputes are regulated by the Chicago Convention and non-commercial disputes are regulated by bilateral agreements entered into between the respective countries.
The above-discussed multilateral and bilateral instruments deal with disputes involving nation States. However, of late, the trend of adopting arbitration as the primary dispute resolution mechanism has caught up with contractual agreements inter se corporations working in the aviation sector, as also contractual agreements between such corporations and Government of the relevant nation, which have also seen a surge in different nature of disputes. Generally speaking, the said disputes relate to:
(a) aircraft leasing agreements;
(b) delay in delivery of aircrafts and/or their spare parts;
(c) supply of defective aircraft spare parts and/or faulty rework and repairs, etc.;
(d) servicing of aircrafts;
(e) commissions owing to sale of aircrafts;
(f) intellectual property disputes relating to equipment and/or other products for aircraft and airlines; and
(g) information technology disputes relating to airline reservation system.
In relation to such disputes, parties may choose to include an arbitration agreement in their contracts, providing for ad hoc or institutional arbitration.
As would be evident from the above discussion, the evolution of arbitration as the primary source of dispute resolution in the aviation sector has followed a systematic process: at first, States refrained from designating the ICAO Council as the dispute settlement body; then, States included both consultation and ad hoc arbitration clauses in bilateral agreements; and finally, States identified arbitration as the only legal dispute resolution mechanism under the bilateral agreements. The said trend has both contractual and practical support9.
Given the above-discussed timeline of gradual development of arbitration as the preferred medium of aviation dispute resolution, it can be asserted, with some conviction, that arbitration is increasingly playing a constructive role in resolving international aviation disputes.
Several factors have led to choice of arbitration as a preferred, and primary, choice for settlement of international civil aviation disputes:
(1) adjudication of aviation disputes requires specialised knowledge of Air Law, science and technology35 and arbitration process offers the choice of arbitrators with technical and subject-matter expertise;
(2) arbitration offers flexibility with respect to choice of jurisdiction and governing law, seat of arbitration, composition of the Arbitral Tribunal, applicable procedure, etc.;
(3) arbitration process and procedures ensure protection of confidentiality and regulated process of disclosure, which is a very sensitive aspect of aviation disputes in view of involvement of security and technical issues and information; and
(4) arbitration process is cost-effective, provides expeditious resolution of disputes and offers finality and cross-border enforceability.
EMERGING TRENDS IN INTERNATIONAL AVIATION ARBITRATION
The increasing trend of adopting arbitration as the primary dispute resolution mechanism in the aviation sector has resulted in emergence of important trends, which have, and continue to, shape the jurisprudence in this sphere.
Settlement of aviation disputes through arbitration have, primarily, been on ad hoc basis, which has triggered criticism for several reasons, including from the perspective of supervision, availability of subject-matter and technical experts, legal certainty of arbitral awards and their enforcement. Therefore, in the recent times, barring a few exceptions, there has been a thrust towards institutional arbitration for settlement of aviation disputes.
The International Court for Aviation and Space Arbitration, based in Paris, was established in the year 1994 by the Société Française de Droit Aérien et Spatial, with the aim to “address the specificity and complexity (rather than the volume) of disputes arising from air and space activities”.36 Though the Rules of Arbitration of the International Court for Aviation and Space Arbitration provide for beneficial provisions relating the availability of an “emergency arbitrator procedure” and the maintenance of lists of recommended arbitrators and experts, the same, looking for the perspective of current scenario and complexities associated with modern day disputes, require updation. Additionally, with the approach behind establishment of the said institution being more idealistic than realistic, its contribution from practical point of view has been negligible. To date, its existence has remained almost secretive37, inasmuch as, the institution has no website, its arbitration rules are not readily available and it appears the body has never been utilised since its creation.
The European Organisation for the Safety of Air Navigation (“the Eurocontrol”)38, in the year 2001, mooted the Eurocontrol draft Arbitration Policy, in a step towards implementation of dispute resolution process referred to in Article 34 of the Eurocontrol International Convention relating to cooperation for the Safety of Air Navigation, 1960. The Eurocontrol draft Arbitration Policy, while providing for arbitration as the dispute resolution mechanism for disputes arising under the Eurocontrol Convention, specifies that the Arbitral Tribunal for adjuration of such disputes shall consist of three arbitrators, who shall be highly qualified jurists and experts in air transport matters. Parties have also been afforded the discretion to choose an expedited arbitration process for cases not involving complex issues. A monitoring mechanism, which empowers the Director General of the Eurocontrol to monitor the enforcement of the awards and provide report on a regular basis to the General Assembly of the Eurocontrol, is also envisaged. However, the most significant criticism of the Eurocontrol draft Arbitration Policy is that though the said policy has been envisaged and designed especially for aviation disputes, the same falls short of creation of a specialised arbitration institution to oversee, supervise and regulate the arbitration process envisaged therein.
At this stage, it is pertinent to make a reference to the sixth meeting of the Worldwide Air Transport Conference held at Montreal, Canada, between 18-3-2013 and 22-3-2013, under the aegis of ICAO, wherein certain member States39 proposed the concept of accelerated dispute resolution mechanism by way of “electronic arbitration”40. However, general application of this process in the aviation sector is debatable, especially in cases involving complex technical and legal issues.
Establishment of the Shanghai International Aviation Court of Arbitration (“the Siaca”), on 28-8-2014, is the most recent milestone in the process of settlement of aviation disputes through arbitration. Established in the Shanghai Free Trade Zone, with joint efforts by the China Air Transport Association, the International Air Transport Association and the Shanghai International Arbitration Centre, the Siaca is affiliated with the Shanghai International Arbitration Centre and relies upon its arbitration rules and panel of arbitrators41. In fact, after establishment of the Siaca, the Shanghai International Arbitration Centre has added 71 domestic and international aviation and legal experts to its panel of arbitrators, in November 201442. Repository of aviation legal experts maintained for resolution of disputes referred to the Siaca constitutes a useful resource to the parties seeking professionals and expert resolution of their disputes.
The Siaca is envisaged to deal with varied disputes in the aviation industry, including disputes between airline companies and airports, or between handlers, such as disputes relating to air transportation, aircraft manufacturing, aircraft sales, aircraft financial leasing, aviation insurance, general aviation trusteeship, ground services, etc. The establishment of the Siaca is a relatively recent development and, at present, there is a lack of reliable and comprehensive data on the number of proceedings administered by the Siaca. Consequently, it is premature to comment about its effectiveness and viability. However, legal and aviation experts have consistently hailed this development as a significant headway in settlement of aviation disputes through arbitration and it is expected to make crucial contribution in strengthening the process of arbitration for settlement of aviation disputes.
In addition to the above, established institutions administering arbitration have also tried to address the issue of increasing use of arbitration as the primary dispute resolution mechanism in the aviation sector.
The American Arbitration Association, and its international division, the International Centre for Dispute Resolution (“the ICDR”), offers a specialised panel for aerospace, aviation and national security claims43, which consists of leading industry experts, who possess significant industry experience of handling complex and high value aerospace, aviation, defence, cyber and security related disputes, on both domestic and international front. However, a closer look at the wordings used in the aerospace services segment, it becomes evident that the ICDR concentrates primarily on defence and security and not so much on civil aviation. Additionally, a perusal of the reports published by ICDR would reveal that the abovementioned services offered by the ICDR have not been put to use.
The Reports published by the Singapore International Arbitration Centre (SIAC) reveal that its arbitration rules have been put to use for settlement of a few aviation disputes44, however the said trend lacks consistency.
CONCLUSION
The debate concerning the viability of use of ad hoc and institutional arbitration, vis-à-vis each other, for settlement of aviation disputes, has gained substantial momentum in the recent times, with some authors advocating a uniform international dispute resolution process, through establishment of a permanent arbitration tribunal, for settlement of aviation disputes9. However, for settlement of aviation disputes, the feasibility and necessity of establishing a single uniform forum for resolution of aviation disputes have, so far been considered, as controversial, impossible or highly debatable45.
Intrinsic aspects of the aviation industry, which make arbitration as the most suited medium of dispute resolution, include long-terms commercial relationship, few commercial alternatives, highly regulated nature, significant capital investment, relationship involving multiple jurisdiction nexus and complex technical background46.
Aviation industry is characterised by lack of alternatives in several aspects and therefore, long-term commercial relationships are the basis of the aviation industry. The arbitration process needs to give special emphasis to this aspect and ensure preservation of the same, during and post the arbitration process, by ensuring that the dispute resolution process through arbitration is not extremely adversarial.
Additionally, considering the nature of disputes and parties involved, efficiency and flexibility of the arbitration process, as also involvement of subject-matter and technical experts in the adjudication process, is imperative.
The process of settlement of disputes through arbitration, whether ad hoc or institutional, should take into consideration the above aspects of the aviation industry and aim at providing a dispute resolution process suited for the aviation industry, taking into consideration the concerns and interest of the relevant stakeholders. Consequently, it is imperative for the arbitration process to adapt to the needs characterised by disputes in aviation sector.
† Advocate-on-Record, Supreme Court of India. <viplavsharma@gmail.com>.
*The article has been published with kind permission of SCC Online cited as (2023) 6 SCC J-50
1. P.C. Markanda, Law Relating to Arbitration and Conciliation (Wadhwa and Company, 2003), pp. 7-8.
2. Nigel Blackaby and Constantine Partasides, Redfern and Hunter on International Arbitration (Oxford University Press, 2009), p. 2.
3. Id, pp. 31-32.
4. Id, p. 1.
5. United Nations General Assembly Resolution 40/72, 11-12-1985.
6. Nigel Blackaby and Constantine Partasides, Redfern and Hunter on International Arbitration, (Oxford University Press, 2009), p. 8. Philip C. Jessup, “Transnational Law”, Stores Lectures on Jurisprudence (Yale University Press, 1956), pp. 1-113, uses the term “transnational” to describe those rules of law, whether local, national or international, which govern cross-border relationships and transactions.
7. “The International Solution to International Business Disputes—ICC Arbitration”, ICC Publication No. 301 (1977), p. 19.
8. Id, p. 3.
9. Luping Zhang and Rita Uva, “The Role of Arbitration in International Civil Aviation Disputes”, Young Arbitration Review, No. 1 (January 2016), pp. 17-23.
10. V. Nase, “ADR and International Aviation Disputes between States”, ADR Bulletin, Vol. 6, No. 5 (2003), pp. 81-87.
11. International Convention for Air Navigation, Art. 37: dealing with the subject of dispute resolution, reads as:
37. In the case of a disagreement between two or more States relating to the interpretation of the present Convention, the question in dispute shall be determined by the Permanent Court of International Justice to be established by the League of Nations, and, until its establishment, by arbitration.
If the parties do not agree on the choice of the arbitrators, they shall proceed as follows:
Each of the parties shall name an arbitrator, and the arbitrators shall meet to name an umpire. If the arbitrators cannot agree, the parties shall each name a third State, and the third State so named shall proceed to designate the umpire, by agreement or by each proposing a name and then determining the choice by lot.
Disagreement relating to the technical regulations annexed to the present Convention, shall be settled by the decision of the International Commission for Air Navigation by a majority of votes.
In case the difference involves the question whether the interpretation of the Convention or that of a regulation is concerned final decision shall be made by arbitration as provided in the first paragraph of this Article.
12. Pan American Convention on Commercial Aviation, Art. 36: dealing with the subject of dispute resolution, reads as:
36. In case of disagreement between two contracting States regarding the interpretation or execution of the present Convention the question shall, on the request of one of the Governments in disagreement, be submitted to arbitration as hereinafter provided. Each of the Governments involved in the disagreement shall choose another Government not interested in the question at issue and the Government so chosen shall arbitrate the dispute. In the event the two arbitrators cannot reach an agreement they shall appoint another disinterested Government as additional arbitrator. If the two arbitrators cannot agree upon the choice of this third Government, each arbitrator shall propose a Government not interested in the dispute and lots shall be drawn between the two Governments proposed. The drawing shall devolve upon the Governing Board of the Pan American Union.
The decision of the arbitrators shall be by majority vote.
13. It is pertinent to mention that right from inception, various aspects of aviation sector have been regulated, to some degree, by bilateral agreements between States. First such agreement was entered into between France and Germany in the year 1913. This was followed by some other bilateral agreements e.g. the Greece-Poland Agreement, 1931; France-Hungary Agreement, 1935 and the Hungary-Netherlands Agreement, 1936. See, Peter Haanappel, Pricing and Capacity Determination in International Air Transport: A Legal Analysis (Kluwer Law and Taxation Publishers, 1984) p. 25.
14. Presently, a total of 192 countries have ratified the Chicago Convention.
15. See “Authorization to the Council to act as an arbitral body”, ICAO Assembly Resolution A1-23, 1947.
16. Chicago Convention, Art. 84: dealing with the issue of settlement of disputes, reads as:
84. Settlement of disputes.—If any disagreement between two or more contracting States relating to the interpretation or application of this Convention and its Annexes cannot be settled by negotiation, it shall, on the application of any State concerned in the disagreement, be decided by the Council. No member of the Council shall vote in the consideration by the Council of any dispute to which it is a party. Any contracting State may, subject to Article 85, appeal from the decision of the Council to an ad hoc Arbitral Tribunal agreed upon with the other parties to the dispute or to the Permanent Court of International Justice. Any such appeal shall be notified to the Council within sixty days of receipt of notification of the decision of the Council.
17. Chicago Convention, Art. 85: provides for procedure to be adopted in case the dispute is referred to arbitration in terms of Article 48, reads as:
85. Arbitration procedure.—If any contracting State party to a dispute in which the decision of the Council is under appeal has not accepted the Statute of the Permanent Court of International Justice and the contracting States parties to the dispute cannot agree on the choice of the Arbitral Tribunal, each of the contracting States parties to the dispute shall name a single arbitrator who shall name an umpire. If either contracting State party to the dispute fails to name an arbitrator within a period of three months from the date of the appeal, an arbitrator shall be named on behalf of that State by the President of the Council from a list of qualified and available persons maintained by the Council. If, within thirty days, the arbitrators cannot agree on an umpire, the President of the Council shall designate an umpire from the list previously referred to. The arbitrators and the umpire shall then jointly constitute an Arbitral Tribunal. Any Arbitral Tribunal established under this or the preceding Article shall settle its own procedure and give its decisions by majority vote, provided that the Council may determine procedural questions in the event of any delay which in the opinion of the Council is excessive.
18. Chicago Convention, Art. 86: reads as:
86. Appeals.—Unless the Council decides otherwise any decision by the Council on whether an international airline is operating in conformity with the provisions of this Convention shall remain in effect unless reversed on appeal. On any other matter, decisions of the Council shall, if appealed from, be suspended until the appeal is decided. The decisions of the Permanent Court of International Justice and of an Arbitral Tribunal shall be final and binding.
19. More detailed rules, primarily dealing with procedural aspects of the dispute resolution process provided for in Articles 84 to 88 of the Chicago Convention, are enumerated in ICAO Document 7782/2, titled “Rules for the Settlement of Differences”. These Rules of Procedure were adopted in the year 1957 and revised in the year 1975.
20. Chicago Convention, Art. 66: reads as:
66. Functions relating to other agreements.—(a) The Organization shall also carry out the functions placed upon it by the International Air Services Transit Agreement and by the International Air Transport Agreement drawn up at Chicago on 7-12-1944, in accordance with the terms and conditions therein set forth.
(b) Members of the Assembly and the Council who have not accepted the International Air Services Transit Agreement of the International Air Transport Agreement drawn up at Chicago on 7-12-1944 shall not have the right to vote on any questions referred to the Assembly or Council under the provisions of the relevant Agreement.
21. See International Air Services Transit Agreement, 1944, Art. 2 and International Air Transport Agreement, 1944, Art. 4.
22. India v. Pakistan (1952), United Kingdom v. Spain (1967), Pakistan v. India (1971), Cuba v. United States of America (1998) and United States of America v. Fifteen European Nations (2000).
23. Paul Stephen Dempsey, “Flights of Fancy and Flights of Fury: Arbitration and Adjudication of Commercial and Political Disputes in International Aviation”, Georgia Journal of International and Comparative Law, Vol. 32, (2004), pp. 231-305.
24. Michael Milde, International Air Law and ICAO (Eleven International Publishing, 2012), p. 197.
25. Michael Milde, International Air Law and ICAO, (Eleven International Publishing, 2012), p. 197. See also Gabriel S. Sanchez, “The Impotence of the Chicago Convention Dispute Settlement Provisions”, 10 Issues, Aviation Law & Policy, Vol. 10 (2010), p. 27.
26. Convention on Damage by Foreign Aircraft to Third Parties on the Surface, 1952, Art. 15(7), reads as:
15.***
***
7. (a) Where the State overflown has reasonable grounds for doubting the financial responsibility of the insurer, or of the bank which issues a guarantee under Para 4 of this Article, that State may request additional evidence of financial responsibility, and if any question arises as to the adequacy of that evidence the dispute affecting the States concerned shall, at the request of one of those States, be submitted to an Arbitral Tribunal which shall be either the Council of the International Civil Aviation Organization or a person or body mutually agreed by the parties.
(b) Until this tribunal has given its decision the insurance or guarantee shall be considered provisionally valid by the State over flown.
Additionally, Article 20(1) of the Convention on Damage by Foreign Aircraft to Third Parties on the Surface, 1952 provides thus:
20. (1) Actions under the provisions of this Convention may be brought only before the courts of the contracting State where the damage occurred. Nevertheless, by agreement between any one or more claimants and any one or more defendants, such claimants may take action before the courts of any other contracting State, but no such proceedings shall have the effect of prejudicing in any way the rights of persons who bring actions in the State where the damage occurred. The parties may also agree to submit disputes to arbitration in any contracting State.
27. Paul Stephen Dempsey, Public International Air Law (McGill University, 2008) p. 702.
28. See, for example, Bilateral Air Services Agreement between the US and the UK, 1977, Art. 17: laying down detailed procedure for settlement of disputes through arbitration, reads as:
17. Settlement of disputes.—(1) Any dispute arising under this Agreement, other than disputes where self-executing mechanisms are provided in Article 12 (Tariffs) and Annex 2, which is not resolved by a first round of formal consultations, may be referred by agreement of the contracting parties for decision to some person or body. If the contracting parties do not so agree, the dispute shall at the request of either contracting party be submitted to arbitration in accordance with the procedures set forth below.
(2) Arbitration shall be by a tribunal of three arbitrators to be constituted as follows:
(a) within 30 days after the receipt of a request for arbitration, each contracting party shall name one arbitrator. Within 60 days after these two arbitrators have been nominated, they shall by agreement appoint a third arbitrator, who shall act as President of the Arbitral Tribunal;
(b) if either contracting party fails to name an arbitrator, or if the third arbitrator is not appointed in accordance with sub-para (a) of this paragraph, either contracting party may request the President of the International Court of Justice to appoint the necessary arbitrator or arbitrators within 30 days. If the President is of the same nationality as one of the parties, the most senior Vice-President who is not disqualified on that ground shall make the appointment.
(3) Except as otherwise agreed by the contracting parties, the Arbitral Tribunal shall determine the limits of its jurisdiction in accordance with this Agreement, and shall establish its own procedure. At the direction of the tribunal or at the request of either of the contracting parties, a conference to determine the precise issues to be arbitrated and the specific procedures to be followed shall be held no later than 15 days after the tribunal is fully constituted.
(4) Except as otherwise agreed by the contracting parties or prescribed by the tribunal, each party shall submit a memorandum within 45 days of the time the tribunal is fully constituted. Replies shall be due 60 days later. The tribunal shall hold a hearing at the request of either party or at its discretion within 15 days after replies are due.
(5) The tribunal shall attempt to render a written decision within 30 days after completion of the hearing or, if no hearing is held, after the date both replies are submitted, whichever is sooner. The decision of the majority of the tribunal shall prevail.
(6) The contracting parties may submit requests for clarification of the decision within 15 days after it is rendered and any clarification given shall be issued within 15 days of such request.
(7) Each contracting party shall, consistent with its national law, give full effect to any decision or award of the Arbitral Tribunal. In the event that one contracting party does not give effect to any decision or award, the other contracting party may take such proportionate steps as may be appropriate.
(8) The expenses of the Arbitral Tribunal, including the fees and expenses of the arbitrators, shall be shared equally by the contracting parties. Any expenses incurred by the President of the International Court of Justice in connection with the procedures of para (2)(b) of this Article shall be considered to be part of the expenses of the Arbitral Tribunal.
Additionally, Article 19 of the US-EU Open Skies Agreement, 2007, while laying down detailed procedure for settlement of disputes through arbitration, enacts:
19. Arbitration.—(1) Any dispute relating to the application or interpretation of this Agreement, other than issues arising under Article 20 or under Annex 2, that is not resolved by a meeting of the Joint Committee may be referred to a person or body for decision by agreement of the parties. If the parties do not so agree, the dispute shall, at the request of either party, be submitted to arbitration in accordance with the procedures set forth below.
(2) Unless the parties otherwise agree, arbitration shall be by a tribunal of three arbitrators to be constituted as follows:
(a) Within 20 days after the receipt of a request for arbitration, each party shall name one arbitrator. Within 45 days after these two arbitrators have been named, they shall by agreement appoint a third arbitrator, who shall act as President of the tribunal.
(b) If either party fails to name an arbitrator, or if the third arbitrator is not appointed in accordance with sub-para (a) of this paragraph, either party may request the President of the Council of the International Civil Aviation Organization to appoint the necessary arbitrator or arbitrators within 30 days of receipt of that request. If the President of the Council of the International Civil Aviation Organization is a national of either the United States or a member State, the most senior Vice-President of that Council who is not disqualified on that ground shall make the appointment.
(3) Except as otherwise agreed, the tribunal shall determine the limits of its jurisdiction in accordance with this Agreement and shall establish its own procedural rules. At the request of a party, the tribunal, once formed, may ask the other party to implement interim relief measures pending the tribunal’s final determination. At the direction of the tribunal or at the request of either party, a conference shall be held not later than 15 days after the tribunal is fully constituted for the tribunal to determine the precise issues to be arbitrated and the specific procedures to be followed.
(4) Except as otherwise agreed or as directed by the tribunal:
(a) The statement of claim shall be submitted within 30 days of the time the tribunal is fully constituted, and the statement of defence shall be submitted 40 days thereafter. Any reply by the claimant shall be submitted within 15 days of the submission of the statement of defence. Any reply by the respondent shall be submitted within 15 days thereafter.
(b) The tribunal shall hold a hearing at the request of either party, or may hold a hearing on its own initiative, within 15 days after the last reply is filed.
(5) The tribunal shall attempt to render a written decision within 30 days after completion of the hearing or, if no hearing is held, within 30 days after the last reply is submitted. The decision of the majority of the tribunal shall prevail.
(6) The parties may submit requests for clarification of the decision within 10 days after it is rendered and any clarification given shall be issued within 15 days of such request.
(7) If the tribunal determines that there has been a violation of this Agreement and the responsible party does not cure the violation, or does not reach agreement with the other party on a mutually satisfactory resolution within 40 days after notification of the tribunal’s decision, the other party may suspend the application of comparable benefits arising under this Agreement until such time as the parties have reached agreement on a resolution of the dispute. Nothing in this paragraph shall be construed as limiting the right of either party to take proportional measures in accordance with international law.
(8) The expenses of the tribunal, including the fees and expenses of the arbitrators, shall be shared equally by the parties. Any expenses incurred by the President of the Council of the International Civil Aviation Organization, or by any Vice-President of that Council, in connection with the procedures of para (2)(b) of this Article shall be considered to be part of the expenses of the tribunal.
29. Cheng B., “Dispute Settlement in Bilateral Air Transport Agreements”, Karl-Heinz Böckstiegel (Ed.) Settlement of Space Law Disputes: The present state of the law and perspectives of further development, (Carl Heymanns Verlag KG., 1980), pp. 456-464.
30. This case “is characterized by general agreement between the parties on arbitral procedure, accomplished by a tight pre-arbitration agreement, and willingness of the parties to arbitrate”, see, Paul B. Larsen, “Arbitration of the United States — France Air Traffic Rights Dispute”, Journal of Air Law and Commerce, Vol. 30 (1964), p. 231.
31. United States of America-France Air Transport Services Agreement, 1946, Art. X: reads as:
X. Except as otherwise provided in this Agreement or its Annex, any dispute between the contracting parties relative to the interpretation or application of this Agreement or its Annex which cannot be settled through consultation shall be submitted for an advisory report to a tribunal of three arbitrators, one to be named by each contracting party, and the third to be agreed upon by the two arbitrators chosen provided that such third arbitrator shall not be a national of either contracting party. Each of the contracting parties shall designate an arbitrator within two months of the date of delivery by either party to the other party of a diplomatic note requesting arbitration of a dispute; and the third arbitrator shall be agreed upon within one month after such period of two months.
If either of the contracting parties fails to designate its own arbitrator within two months, or if the third arbitrator is not agreed upon within the time-limit indicated, the President of the International Court of Justice shall be requested to make the necessary appointments by choosing the arbitrator or arbitrators, after consulting the President of the Council of the International Civil Aviation Organization.
The contracting parties will use their best efforts under the powers available to them to put into effect the opinion expressed in any such advisory report. A moiety of the expenses of the Arbitration Tribunal shall be borne by each party.
32. Andreas F. Lowenfeld, Aviation Law: Cases and Materials (Mathew Bender, 1972), p. 25.
33. United States of America v. Italy (1965), United States of America v. France (1978), Belgium v. Ireland (1981), United States of America v. United Kingdom (1992) and Australia v. United States of America (1993).
34. Andrew B. Steinberg and Charles T. Kotuby Jr., “Bilateral Investment Treaties and International Air Transportation: A New Tool for Global Airlines to Redress Market Barriers”, Journal of Air Law and Commerce, Vol. 76 (2011), p. 457.
35. Gabrielle Kaufmann-Kohler, “Arbitration and the Need for Technical or Scientific Expertise” in Arbitration in Air, Space and Telecommunications Law: Enforcing Regulatory Measures (Permanent Court of Arbitration, 2001) pp. 285-296.
36. The Bye-Laws of the International Court for Aviation and Space Arbitration and its Rules of Arbitration were published in Revue Française de droit aérien et spatial, Vol. 2 (1995), pp. 29-54. For additional information, see Michael Bourély, “La creation d’une cour international d’arbitrage aérien et spatial”, German Journal of Air and Space Law (ZLW), Vol. 43 (1994), p. 401.
37. Article 3 of the Rules of Arbitration of the International Court for Aviation and Space Arbitration specifically provides that proceedings administered thereunder are subject to “absolute secrecy”.
38. Eurocontrol was established in the year 1960 to oversee air traffic control of the member States. It currently has 41 member States.
39. The Working Paper was presented by Morocco on behalf of a group of Arab States (Algeria, Bahrain, Egypt, Iraq, Jordan, Lebanon, Libya, Mauritania, Morocco, Kingdom of Saudi Arabia, Sudan, Oman, Palestine, Qatar, Tunisia, United Arab Emirates and Yemen).
40. See, Working Paper on “Electronic Arbitration as a means of Dispute Settlement in a fully Liberalized Environment”, ATConf/6-WP/42.
41. The current panel of the Shanghai International Arbitration Centre, which entered into force on 1-5-2018, consists of 946 arbitrators.
42. <http://www.shiac.org/Aviation/aboutus_E.aspx?page=2> last accessed 25-8-2020.
43. <https://go.adr.org/aans-panel.html> last accessed 25-8-2020.
44. Annual Report 2018, “The Singapore International Arbitration Centre” (17-7-2020). The report is available at <www.siac.org.sg/images/stories/articles/annual_report/ SIAC_AR2018-Complete-Web.pdf> last accessed 25-8-2020.
45. N. Antwerpen, Cross-border provision of Air Navigation Services with specific reference to Europe (Kluwer Law International, 2008) pp. 39-40 and 212-214.
46. “International Commercial Disputes in the Aviation Industry: A Strategy for Efficient and Effective Resolution”, Briefing Booklet for the International Council (Ohio State University, 2014-15) p. 3.
