Arbitration is an alternative to dispute resolution before state courts, through private bodies (arbitral tribunals) that issue decisions with the same standing as court judgments.
In Mozambique, arbitration is governed by Law No. 11/99 of 8 July, also known as the Arbitration, Conciliation and Mediation Law (LACM).
One of the fundamental principles of alternative dispute resolution is freedom: the State recognises and respects the parties' right to use alternatives to the courts whenever they choose. This freedom has particular significance in arbitration.
Not every dispute may be referred to arbitration. Disputes involving matters in which the State considers direct intervention necessary because of their nature are excluded. This applies to what are termed 'rights that cannot be freely disposed of' (Article 5(2)(b) LACM). Parents cannot, for example, refer a dispute over custody of their minor child to arbitration. By its nature, such a matter must be submitted to the courts.
This principle of freedom, also called private autonomy, is a general principle of civil law (Article 405 of the Civil Code), particularly important in contract law. Provided they respect statutory limits, individuals and legal entities are free to:
Conclude written or oral contracts;
Conclude the types of contracts they choose, selecting those already provided for by law or creating new contractual forms;
Determine contractual content, including combining two or more contract types into a mixed contract;
Amend contracts they have concluded;
Suspend or terminate contracts, or revive a terminated contract.
The Arbitration, Conciliation and Mediation Law clearly demonstrates that freedom is not confined to contracts. In arbitration, it operates from the moment a possible dispute is contemplated at the contract-drafting stage until a decision is rendered. The following ten situations illustrate the decisive role of party freedom under the Law:
Choosing arbitration as the dispute resolution mechanism: parties are free to choose arbitration for disputes arising from their relationships, such as breach of contract, or other matters they consider suitable, including clarification, completion, updating and review of contracts or other legal relationships (Article 4(1) and (3) LACM, read with Article 405 of the Civil Code). An agreement to arbitrate may be included in the contract or concluded later, and may concern a specific existing dispute (submission agreement) or future disputes (arbitration clause): Article 4(2) LACM. Reinforcing party freedom, an arbitration clause in a standard-form contract is effective only if the adhering party initiates arbitration or expressly agrees to it (Article 10(5) LACM).
Waiving arbitration: parties may waive it expressly or implicitly. Commencing court proceedings alone is insufficient: implied waiver requires failure to raise the arbitration defence (Article 13 LACM).
Choosing the law governing the substance of the contract: parties may determine the legal rules used to interpret their contract or establish the consequences of breach or change where the contract does not address them. Subject to good morals and public policy, that choice is not confined to the rules of a particular State; it may include or be limited to general principles of law, usages, customs and international trade rules (Article 34(1) and (4) LACM).
Constituting the tribunal: parties determine how the arbitral tribunal is formed, either by appointing arbitrators, designating an institution whose rules will govern its constitution (Articles 16, 17(1) and 18 LACM), or determining the number and identity of arbitrators (Article 18 LACM).
Choosing procedural rules: arbitration allows parties to establish rules governing proceedings from beginning to end, including whether proceedings will be entirely written or contain oral stages, notification procedures, response periods and the time for the award. They may simply choose an institution's arbitration rules or designate it to organise the arbitration (Articles 27(1) and (2), 29 and 35 LACM).
Choosing the language of international arbitration: parties may select the procedural language (Article 56(1) LACM). This is particularly important in international arbitration involving two or more countries and languages, such as a contract with a Chinese construction company to build a tyre factory in Mozambique for a Nigerian company.
Choosing the seat of arbitration: parties may select it; failing agreement, the arbitrators decide. Party convenience is addressed in Article 27(3). The seat differs from the hearing venue; the permissibility of a virtual format requires separate analysis.
Resolving the dispute: parties may agree a settlement. It will be recorded in an award if they request this and the tribunal has no objection (Article 38 LACM).
Suspending arbitration: parties may agree to suspend proceedings for up to one month whenever convenient, provided they notify the arbitrators in writing (Article 41 LACM).
Terminating proceedings: parties may also terminate arbitration by agreement without an award being rendered (Article 40(2)(b) LACM). They may, for example, consider continuing inappropriate because of COVID-19's economic impact on their businesses. The agreement should clarify the effects of termination on any future arbitration.
These extensive powers call for care to ensure that agreed rules do not impede dispute resolution. When choosing an administering institution, parties should ensure that their provisions are compatible with its rules. Combining rules may be useful but requires consistency and clarity.
Freedom in arbitration thus takes on further dimensions, reinforcing party control from the choice of arbitration through to agreement on the award's content. It reflects contractual freedom under Article 405 of the Civil Code: parties determine not only contractual content but also procedural rules, applicable law and the operation of the tribunal adjudicating those contracts. It also gives practical expression to minimal State interference in private relationships.
Freedom in arbitration is therefore like an opportunity for the parties to paint a multicoloured picture, provided they preserve harmony between the colours.