International Commercial Arbitration at Faroe Islands (Denmark)
Here’s an overview of International Commercial Arbitration in the Faroe Islands (a self-governing territory within the Kingdom of Denmark):
International Commercial Arbitration in the Faroe Islands
Legal and Institutional Framework
Jurisdiction & Legal System:
The Faroe Islands have a high degree of self-government but remain part of the Kingdom of Denmark. Their legal system is rooted in Danish law but includes Faroese statutes. However, the arbitration laws specifically applicable to the Faroe Islands are less developed compared to Denmark.
Danish Arbitration Act:
Since the Faroe Islands are part of the Kingdom of Denmark, Danish arbitration law (the Danish Arbitration Act) may be applicable by extension or analogy, particularly for international commercial arbitration, unless local Faroese law provides otherwise.
UNCITRAL Model Law:
Denmark has adopted arbitration laws consistent with the UNCITRAL Model Law, and this framework often informs arbitration procedures applicable to the Faroe Islands, especially for international disputes.
New York Convention:
Denmark is a signatory to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, which applies to the Faroe Islands as well. This ensures that arbitral awards can be enforced internationally.
Arbitration Institutions and Practice
Local Arbitration:
The Faroe Islands do not have a specialized arbitration institution or center dedicated to commercial arbitration.
Use of Danish or International Institutions:
Parties in the Faroe Islands typically use:
Danish Institute of Arbitration (DIA)
International bodies like the International Chamber of Commerce (ICC)
UNCITRAL Arbitration Rules for ad hoc arbitrations
Arbitration proceedings are usually conducted in Danish or English, depending on the parties’ agreement.
Advantages of Arbitration in the Faroe Islands
Neutral and Flexible: Arbitration provides a neutral forum outside courts, important in international commercial disputes.
Enforceability: Awards made under arbitration seated in the Faroe Islands are enforceable internationally through the New York Convention.
Judicial Support: Faroese courts generally support arbitration agreements and arbitral awards, providing assistance such as interim measures if required.
Practical Considerations
Choice of Seat: While the Faroe Islands can be agreed as the seat of arbitration, parties often prefer Denmark or other established arbitration seats for procedural certainty.
Governing Law: Parties should clarify the governing substantive law, often Danish law or another jurisdiction’s law.
Language: English is often preferred in international arbitration for wider accessibility.
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