Arbitration is the process of committing the settlement of a dispute to one or more independent and unbiased arbitrators who are selected by the disputing parties. By doing so, it permits litigation to be shifted out of the courts, avoiding delays and the burdensome state litigation process.
The Technique You Can Make Use of
Arbitration, a very ancient technique of conflict settlement, was already being used by merchants in the Middle Ages to resolve disputes. Because of the presence of arbitrators at trade fairs, it was feasible to resolve conflicts between merchants rapidly as a result of this private court system. Arbitrators delivered their decisions on the spot. For International Commercial Arbitration this works fine.
Since the 1980s, arbitration has established itself as a legitimate form of justice, the existence of which is acknowledged not only by the parties who resort to it, but also by the governments of the countries in which it is practised, despite the fact that they have their own systems of justice.
International contracts with arbitration clauses account for over 90 percent of all transactions. However, although this condition may be voluntary (allowing the parties to choose between arbitration and state courts in the case of a disagreement), it is often required by law. It may be used in conjunction with an amicable conflict settlement approach like as mediation and an appeal to an institutional arbitration body such as the International Chamber of Commerce or it can be used on its own.
What are the benefits of arbitration?
According to, group director legal disputes and conflict resolution at Orange and chair of the Corporate Counsel International Arbitration Group, international arbitration is not an alternative in this case; rather, it is the solution that is logically necessary for reasons of neutrality and forum (CCIAG).
- Arbitration must be anticipated at the time of contract signing in order for it to become the standard method for resolving international disputes. As we can see, arbitration has unavoidably become a very controversial process. Due to the fact that a disagreement is the fundamental source of arbitration, this gravity is not unavoidable.
- When compared to a state ruling, arbitration provides a more efficient and expeditious means of addressing complicated international disputes.
- Although the International Bar Association (IBA) standards provide clarity on arbitration agreements by offering a variety of models, there is an endless number of options available that are highly dependent on the firms involved and the economic environment in which they operate.
In order to be effective, the arbitration provision must be drafted within the context of the parties’ respective power structures. According to the experts, the inclusion of a suitable dispute resolution provision in a contract goes beyond the balance of power to serve the interests of all parties.
One other significant benefit of arbitration processes is their secrecy, which is sometimes the primary motivation for selecting this form of resolving disagreements. Moreover, an easily comprehended and speedy sentence allows the parties to continue their commercial connection more effectively than a court judgment does.
Finally, arbitration culminates in a decision that finally resolves the disagreement and has the authority of res judicata (the law of finality). The benefits of this sentence, as opposed to a judgment, are that it is not open to appeal and that it is governed by the 1958 New York Convention, which ensures that it is enforced in 145 countries across the globe.