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International Arbitration

International Arbitration

Introduction

International arbitration is the process where international commercial disputes are resolved without the aid of legal jurisdictions, as these disputes tend to transcend national boundaries and local legal codes.  While the dispute can be brought to litigation in one country, the court may not be able to establish jurisdiction over the party.  In circumstances such as this, binding international arbitration is the best solution for the two parties to resolve the dispute with a mutually agreed upon settlement.

Why choose international arbitration?

Arbitration is the processes where two parties agree to have a third party assess their dispute and issue a binding settlement agreement for both parties to follow.  The rules of arbitration are agreed upon in advance, either through a contractual arrangement or post-dispute as a means of avoiding litigation.  Nations or parties that do not use arbitration to settle disputes run the risk of non-enforceable legal decisions in foreign jurisdictions and non-compliance with settlements due to a lack of enforceable standards dealing with international commercial legal disputes.

Is international arbitration widely accepted?

The precedent for international arbitration was set at the United Nations Convention on Recognition and Enforcement of Foreign Arbitral Awards of 1958, also known as the New York Convention.  Nations that attended the convention agreed to standards of international arbitration which allows the signatory countries to settle their dispute by a common standard within any jurisdiction that abides by the New York Convention, including a neutral third country.  In addition to commercial disputes, other nations may use arbitration to resolve disputes, such as the case of Eritrea v. Yemen arbitration over the Hanish Islands in 1999.  After a brief conflict, arbitrators ended the conflict, without further bloodshed, by ruling in favor of Yemen’s territorial rights.

Who conducts international arbitration?

There are several organizations that conduct international arbitration, including:

- International Chamber of Commerce
- International Centre of Dispute Resolution
- London Court International Arbitration

These organizations provide a framework to resolve disputes as well as resources to find impartial arbitrators.  Additionally, the Swiss, with a lengthy reputation as a provider of international Alternate Dispute Resolution, have their own “rules of commercial mediation” that standardizes both arbitration and mediation practices.

How can two parties agree to international arbitration?

The most common way for two parties to agree on international arbitration is to abide by a pre-existing arbitration clause in any agreement between the parties.  Therefore, if there is a possibility that disagreements may arise during the agreement, the parties should insert an arbitration clause into the agreement.  This clause will clarify the issues that can be arbitrated as well as technical details such as costs, arbitrator qualifications, and applicable laws.

Source:  http://www.altenburger.ch/uploads/tx_altenburger/jl_2008_Swiss_Rules_Commercial_Mediation.pdf

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