ARBITRATION
A more formal, voluntary, binding process in which both parties agree to a neutral arbitration body to resolve disputes.
This method is the most commonly used in international business, known for its prominence in various international contracts such as those for the purchase of goods, employment, or transportation, to name a few.
The advantages are the relatively reduced costs and increased speed of the process compared to litigation, the private nature of proceedings, flexibility in evidence admissibility, and the party's limited right to appeal.
The disadvantages are the party's limited right to appeal, except in cases of misconduct or fraud by the arbitrator, the arbitrator exceeding his or her authority, or the arbitrator refusing to consider material evidence.
Limited discovery in arbitration proceedings can leave parties unaware of the other party's case, and relaxed procedural rules may allow evidence that would not be admissible in court. Finally, there is no precedential value to an arbitrator's decision, which means it can't be relied on for future proceedings(Schaffer, Agusti and Dhooge, 2018).
INTERNATIONAL ARBITRATION BODIESThe rules that govern the conduct of proceedings, procedures for finding the facts and applying the law, and the making of awards are known as arbitration rules.Arbitration bodies are preferred due to their impartial and straightforward rules. Each of the arbitration bodies listed below uses its own procedural rules; however, many of them use the rules drafted by the Model Law on International Commercial Arbitration of the United Nations Commission on International Trade Law (UNCITRAL)Some of the arbitration bodies include the following.g
- American Arbitration Association
- Arbitration Institute of the Stockholm Chamber of Commerce
- Cairo Regional Center for International Commercial Arbitration
- China International Economic and Trade Arbitration Commission
- Dubai International Arbitration Center
- Hong Kong International Arbitration Centre
- International Court of Arbitration of the International Chamber of Commerce
- Japan Commercial Arbitration Association
- London Court of Arbitration
- St. Petersburg International Commercial Arbitration Court
- Singapore International Arbitration Centre
- World Intellectual Property Organization (WIPO) Arbitration and Mediation
The two below provide dispute resolution between private parties and national governments
- The International Centre for the Settlement of Investment Disputes
- Permanent Court of Arbitration at The Hague (Schaffer, Agusti and Dhooge, 2018)
ARBITRATION CLAUSES & THE ENFORCEMENT OF ARBITRATION AWARDS
Clauses requiring any disputes arising from the contract in question to be resolved by a process of arbitration, removing any uncertainty in the event of a breach of contract or any other dispute, are known as Arbitration Clauses.
These are generally accepted by the courts of most countries.
Most nations' courts recognize and enforce arbitration awards; this is further underpinned by the fact that 150 nations have signed the 1958 United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, otherwise known as the New York Convention. The signatories are required to honour and enforce the arbitral awards of member countries (Schaffer, Agusti and Dhooge, 2018)
