What is international arbitration?
Historically, international arbitration has been defined as a ‘private’ and ‘non-national’ mechanism
that parties use to amicably resolve their disputes with a ‘third party neutral’ (known as the
arbitrator) to issue a ‘final binding’ decision (known as the arbitral award). Various other
definitions have been used to interpret such a meaning. The legal definition of arbitration focuses on
the fact that a court other than the national court of the jurisdiction of the parties’ domicile issues a
binding decision.
Halsbury’s Laws of England also refers to the fact that such a tribunal applies the relevant laws
to the dispute, not the national court of law.
Martin Domke also refers to this tribunal, an impartial third person, who will issue a final and
binding decision.
Rene David emphasises that arbitration is distinct in which its power to arbitrate arises from a
private agreement between the parties, not by a competent jurisdiction.
Layman’s definition simply refers to the production of an ‘equitable’ and ‘uncontrolled’
decision.
What are the key elements of arbitration?
First, it is a private mode of dispute resolution. It is held outside the national courts and closed to
non-parties like the press and public. Such privacy helps to overcome difficulties in resolving
commercial disputes involving foreign states and state entities, especially considering the
hindrances caused by sovereign immunity in national courts. It can also help to produce private
resolutions to prevent aggravating disputes, limiting collateral damage and forging business-like
resolutions that are amicable.
Second, it is ‘non-national’. Parties are free to choose ‘neutral’ seats where they have no
connection and the decisions are enforceable through the New York Convention. Due to its
international nature, arbitration is open to companies and states, as well as private individuals unlike
national litigation which is generally limited to such parties. Yet some countries still prefer to use
national rather than international arbitration, like the US due to speed and cost. But then again,
other countries like Singapore aim to apply international arbitration. For example, in 2015,
Singapore’s International Commercial Court offers a panel of international judges with expertise in
commercial disputes, excluding the use of domestic laws of evidence.
Third, arbitration is consensual. Without the parties’ consent to arbitrate which is then recorded in
an arbitration clause in their agreement, arbitration cannot take place. Thus it is never automatically
asserted following a dispute.
Fourth, arbitration is adjudicative. Through a fair and expedient process, arbitration can produce
reasoned judgment based on evidentiary and legal submissions of parties. As often expressly stated
in national law, such process will have to be fair given due process and equal treatment of parties as
expected.
Lastly, arbitration produces final and binding decisions. Rather than through the court’s coercive
power, the arbitrator will hear both parties’ arguments and issue a final binding decision as they
agreed. In fact, there is very limited grounds for annulling such decisions and appeals are never
allowed in arbitration.
Historically, international arbitration has been defined as a ‘private’ and ‘non-national’ mechanism
that parties use to amicably resolve their disputes with a ‘third party neutral’ (known as the
arbitrator) to issue a ‘final binding’ decision (known as the arbitral award). Various other
definitions have been used to interpret such a meaning. The legal definition of arbitration focuses on
the fact that a court other than the national court of the jurisdiction of the parties’ domicile issues a
binding decision.
Halsbury’s Laws of England also refers to the fact that such a tribunal applies the relevant laws
to the dispute, not the national court of law.
Martin Domke also refers to this tribunal, an impartial third person, who will issue a final and
binding decision.
Rene David emphasises that arbitration is distinct in which its power to arbitrate arises from a
private agreement between the parties, not by a competent jurisdiction.
Layman’s definition simply refers to the production of an ‘equitable’ and ‘uncontrolled’
decision.
What are the key elements of arbitration?
First, it is a private mode of dispute resolution. It is held outside the national courts and closed to
non-parties like the press and public. Such privacy helps to overcome difficulties in resolving
commercial disputes involving foreign states and state entities, especially considering the
hindrances caused by sovereign immunity in national courts. It can also help to produce private
resolutions to prevent aggravating disputes, limiting collateral damage and forging business-like
resolutions that are amicable.
Second, it is ‘non-national’. Parties are free to choose ‘neutral’ seats where they have no
connection and the decisions are enforceable through the New York Convention. Due to its
international nature, arbitration is open to companies and states, as well as private individuals unlike
national litigation which is generally limited to such parties. Yet some countries still prefer to use
national rather than international arbitration, like the US due to speed and cost. But then again,
other countries like Singapore aim to apply international arbitration. For example, in 2015,
Singapore’s International Commercial Court offers a panel of international judges with expertise in
commercial disputes, excluding the use of domestic laws of evidence.
Third, arbitration is consensual. Without the parties’ consent to arbitrate which is then recorded in
an arbitration clause in their agreement, arbitration cannot take place. Thus it is never automatically
asserted following a dispute.
Fourth, arbitration is adjudicative. Through a fair and expedient process, arbitration can produce
reasoned judgment based on evidentiary and legal submissions of parties. As often expressly stated
in national law, such process will have to be fair given due process and equal treatment of parties as
expected.
Lastly, arbitration produces final and binding decisions. Rather than through the court’s coercive
power, the arbitrator will hear both parties’ arguments and issue a final binding decision as they
agreed. In fact, there is very limited grounds for annulling such decisions and appeals are never
allowed in arbitration.
