is a leading method for resolving disputes arising from international
commercial agreements and other international relationships. As with arbitration
generally, international arbitration is a creature of contract,
i.e., the parties' decision to submit disputes to binding resolution by one or
selected by or on behalf of the parties and applying adjudicatory procedures,
usually by including a provision for the arbitration of future disputes in
The practice of international arbitration has developed so as to allow parties
from different legal and cultural backgrounds to resolve their disputes,
generally without the formalities of their respective legal systems.
Main Features of International Arbitration
International arbitration has enjoyed growing popularity
with business and other users over the past 50 years. There are a number of
reasons that parties elect to have their international disputes resolved
through arbitration. These include the desire to avoid the uncertainties and
local practices associated with litigation in national courts, the desire to
obtain a quicker, more efficient decision, the relative enforceability of
arbitration agreements and arbitral awards (as contrasted with forum selection
clauses and national court judgments), the commercial expertise of arbitrators,
the parties' freedom to select and design the arbitral procedures,
confidentiality and other benefits.
International arbitration is sometimes described as a hybrid
form of dispute resolution, which permits parties broad flexibility in
designing arbitral procedures. As one example, consider the International
Bar Association (IBA)'s Rules on the Taking of
Evidence in International Commercial Arbitration, revised in 2010.
These rules adopt neither the common law jurisdictions' broad disclosure
procedures (Discovery), nor follow fully the civil law in eliminating entirely
the ability to engage in some disclosure-related practices. The IBA Rules blend
common and civil systems so that parties may narrowly tailor disclosure to the
agreement's particular subject matter.
who chaired the committee that drafted the rules, has noted that the wide
adoption of these rules in international arbitration has led in practice to an
unexpected use by common law practitioners to limit disclosure and by civil law
practitioners to expand it. With a possibly more intuitive cause and practical
effect, arbitral tribunals will often read party election of the IBA Rules as
an election most akin to US-style Discovery. This is hardly surprising given
the Rules' language and the IBA's close ties through the years to the American
Bar Association (ABA).
Rules of evidence represents just one example of the
different practice that applies to international arbitration, and which
distinguishes it from provincial forms of arbitration rooted in the procedures
of a particular legal system. There are a variety of approaches to
international arbitration at the national level, even where model laws have
These approaches can be further impacted by arbitral rules
that may be agreed between the parties. Similarly, international arbitral
practice has given rise to its own non-country-specific standards of ethical
conduct which are believed to apply in international proceedings and, more to
the point, to the arbitrators who are appointed to conduct them.
Differences with Domestic Arbitration and Mediation
International arbitration is a significant variant of the
practice in many countries of arbitration,
from which it is derived and shares many features. It is not just the fact that
international arbitration arises in the context of international contracts that
makes it different. In the international dispute resolution community, it is
widely accepted to be a different animal entirely, involving different
practices and rules, and being represented by a different community of
arbitrators and legal practitioners.
It is essential to draw a firm distinction between Arbitration
and Mediation or Conciliation,
which are both sometimes characterized as forms of ADR (Alternative Dispute Resolution).
In countries where mediation is new or struggling to be introduced as a
concept, this association has given rise to the misleading impression that
mediation is a form of non-binding arbitration, with the arbitrator proposing
or suggesting outcomes based on an assessment of the parties' rights. In fact,
arbitration and mediation or conciliation are fundamentally different: the
former is a binding determination of legal rights, the latter two forms of
dispute resolution involve facilitated negotiation which aims at producing a
The one leads to a binding determination (arbitration),
the other only in the event the parties agree to settle their dispute on mutually
satisfactory terms (mediation).
The Advantages of International Arbitration
For international commercial transactions, parties may face
many different choices when it comes to including a mechanism for resolving
disputes arising under their contract. If they are silent, they will be subject
to the courts of wherever a disaffected party decides to initiate legal proceedings
and believes it can obtain jurisdiction over the other party. This may not sit
well with parties that need to know at the time of entering into their contract
that their contractual rights will be enforced. The alternative to silence is
to specify a method of binding dispute resolution, which can be either
litigation before the domestic tribunal of one of the parties or arbitration.
If the parties choose to resolve their disputes in the courts, however, they
may encounter difficulties.
The first is that they may be confined to choosing one or
the others' courts, as the courts of a third country may decline the invitation
to devote their resources to deciding a dispute that does not involve any of
that country's citizens, companies, or national interests. An exception to that
rule is New York State, which will not entertain a forum non conveniens motion
when the dispute concerns a contract that is worth one million dollars or more
and in which the parties included a choice-of-law clause calling for application
of New York law.
The second, and perhaps more significant difficulty, is that judicial decisions
are not very "portable" in that it is difficult and sometimes impossible
to enforce a court decision in a country other than the one in which it was