Arbitration

International arbitration, like domestic arbitration, is a means by which a dispute can be definitively resolved, pursuant to the parties' voluntary agreement, by a disinterested, non-governmental decision-maker. Or, in the words of the U.S. Supreme Court, "an agreement to arbitrate before a specified tribunal [is], in effect, a specialized kind of forum-selection clause that posits not only the situs of suit but also the procedure to be used in resolving the dispute." (Scherk). "There are as many other definitions of arbitrations as there are commentators on the subject." (Redfern & Hunter)

Commercial arbitration has several defining characteristics. First, arbitration is consensual-the parties must agree to arbitrate their differences. Second, arbitrations are resolved by non-governmental decision-makers-arbitrators do not act as government agents, but are private persons selected by the parties. Third, arbitration produces a definitive and binding award, which is capable of enforcement through national courts.

Another defining characteristic of arbitration is its flexibility, which generally permits parties to agree upon the procedures that will govern the resolution of their dispute. As a consequence, the procedural conduct of arbitrations varies dramatically across industrial sectors, arbitral institutions, and categories of disputes. In particular fields, or individual cases, parties often agree upon procedural rules that are tailor-made for their individual needs.

A side from specialized fields, commercial arbitration often bears significant resemblances to commercial litigation: arbitration will usually involve the submission of written pleadings and legal argument, the presentation of written evidence and (usually) oral testimony, the application of "law" (in the form of judicial precedents and statutes), and the rendition of a binding award. Nevertheless, arbitral procedures are usually less formal than litigation, including on issues such as the amendment of pleadings, the admissibility of evidence, and the mode of presenting legal argument and factual material. Moreover, arbitration generally lacks various characteristics that are common in U.S. litigation, including broad pre-trial discovery, summary judgment procedures, and appellate review.

International commercial arbitration is similar in important respects to domestic arbitration. As in domestic matters, international arbitration is a consensual means of dispute-resolution, by a non-governmental decision-maker, that produces a legally binding and enforceable ruling. In addition, however, international arbitration has several characteristics that distinguish it from domestic arbitration.

Most importantly, international arbitration is often designed and accepted particularly to assure parties from different jurisdiction that their disputes will be resolved neutrally. Among other things, the parties seek a neutral decision-maker (detached from the governmental institutions and cultural biases of either party) applying internationally neutral procedural rules (rather than a particular national legal regime). In addition, international arbitration is frequently regarded as a means of mitigating the peculiar uncertainties of transnational litigation-which can include protracted jurisdictional disputes and expensive parallel proceedings-by designating a single, exclusive dispute resolution mechanism for the parties' disagreements. Moreover, international arbitration is often seen as a means of obtaining an award that is enforceable in diverse jurisdictions.

Although international arbitration is a consensual means of dispute resolution, it has binding effect only by virtue of a complex framework of national and international law. As we will see, international commercial arbitration is subject to a specialized legal regime. International conventions, national arbitration legislation, and institutional arbitration rules provide a sophisticated legal foundation for international arbitrations.

On the most universal level, the United Nations Convention on Recognition and Enforcement of Foreign Arbitral Awards (the "New York Convention") has been ratified by virtually all significant trading states. The Convention obliges member states to recognize and enforce both international commercial arbitration agreements and awards, subject to limited exceptions. Other international conventions impose comparable obligations on member states.

In addition, most developed trading nations, and many other states, have enacted legislation that permits enforcement of arbitration agreements and awards and judicial support of the arbitration process. National laws in such states recognize the capacity of parties to enter into binding agreements to arbitrate future commercial disputes, provide mechanisms for the enforcement of such arbitration agreements (through orders to stay litigation or to compel arbitration), and require the recognition and enforcement of arbitration awards. In addition, modern arbitration legislation limits the power of national courts to interfere in the arbitration process, either when proceedings are pending or in reviewing ultimate awards. In some cases, arbitration statutes permit limited judicial assistance

...