International Commercial Arbitration at Micronesia
Here’s a focused overview of International Commercial Arbitration in the Federated States of Micronesia (FSM):
International Commercial Arbitration in Micronesia
1. Legal Framework
The Federated States of Micronesia (FSM) does not have a comprehensive national arbitration law modeled explicitly on the UNCITRAL Model Law.
Arbitration in FSM is governed largely by general contract and civil procedure laws. There is limited formal legislation specifically dedicated to arbitration.
FSM is not a signatory to the New York Convention (1958) on the Recognition and Enforcement of Foreign Arbitral Awards. This limits the international enforceability of arbitration awards within FSM.
2. Arbitration Practice
Arbitration is possible in FSM by agreement of the parties but tends to be ad hoc rather than institutionally managed.
Without a formal arbitration statute, the process depends heavily on parties’ contractual agreements and local court support.
Arbitration proceedings, if conducted, are typically based on rules agreed upon by the parties or rules of foreign arbitration institutions.
3. Enforcement of Awards
Since FSM is not a party to the New York Convention, enforcement of foreign arbitral awards can be challenging.
Recognition and enforcement rely on domestic contract law and the discretion of local courts.
Local courts may be unfamiliar with international arbitration principles, causing potential unpredictability.
4. Judicial Attitude
Courts in FSM generally respect parties’ autonomy but lack detailed guidance on arbitration.
Judicial involvement in arbitration-related matters is limited but may be necessary for enforcement or interim relief.
5. Challenges
Absence of specific arbitration legislation.
No membership in major international arbitration conventions.
Limited institutional support or recognized arbitration centers.
Potential enforcement difficulties for international awards.
Small legal and commercial infrastructure.
6. Opportunities
Arbitration remains possible by agreement and is an option for dispute resolution where parties prefer privacy and flexibility.
Parties often opt to select foreign arbitration venues (e.g., Singapore, Hong Kong, or other major centers) and applicable foreign laws for arbitration clauses involving FSM.
Legal development in FSM could gradually improve arbitration frameworks.
Summary
The Federated States of Micronesia currently has a limited and informal arbitration regime, with no specialized legislation or institutional arbitration support and no accession to the New York Convention. Arbitration is mainly ad hoc and depends on parties’ agreements and local court discretion. For international commercial arbitration involving FSM parties, it is common to select arbitration under established foreign rules and venues to ensure enforceability and neutrality.
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