Arbitration, International

The Defining Characteristics of International Arbitration

As its name suggests, international arbitration involves the application of arbitration procedures to disputes that are in some sense international. International arbitrations can also be commercial or noncommercial.

Arbitration has several defining characteristics as a dispute resolution procedure. First, arbitration is consensual—the parties must generally agree to arbitrate their differences, and the arbitral tribunal derives its own jurisdiction from the parties' agreement to submit their disputes to arbitration.

Second, arbitrations are resolved by nongovernmental decision makers. Unlike courts, arbitrators are not organs of the state but rather private persons appointed by the parties.

Third, arbitration culminates in a binding award, which is capable of enforcement through national courts. In this respect, the concept of arbitration is different from mediation: unlike a mediator, an arbitrator is empowered to impose a binding solution on the parties. Arbitration acquires its binding force through national legal regimes that give legal effect to the parties' agreement to arbitrate.

Finally, arbitration is comparatively flexible, in contrast to most court proceedings and other formal adjudication procedures. This reflects the roots of arbitration in the parties' consent: the parties are, subject to whatever restrictions are imposed by the applicable national law, free to agree on their own arbitration procedures.

International arbitration may be contrasted with domestic arbitration in a number of respects. Both forms of arbitration share the same general characteristics discussed above. However, the term international is used to draw the distinction between arbitrations that are purely domestic to one particular country and those arbitrations that have some characteristics that transcend the boundaries of one country (for example, because of the nature or subject matter of the dispute, the nationality of the parties, or some other relevant criterion). The distinction between international and domestic arbitration can have important ramifications in terms of not only the goals of the parties to the arbitration but also the legal regime applicable to the arbitration.

Significantly, a major object of international—rather than domestic—arbitration is to assure parties from different jurisdictions that an impartial decision maker will resolve their disputes neutrally. Among other things, the parties to an international arbitration will typically seek to ensure that the decision maker is independent and detached from the courts, governmental institutions, and cultural biases of either party.

Moreover, in agreeing to international arbitration, parties will often be seeking to avoid uncertainties inherent in transnational litigation. These uncertainties can include protracted jurisdictional battles, disputes over choice of law, and simultaneous parallel proceedings in two or more different national jurisdictions. One of the major advantages of international arbitration—rather than proceedings in national court systems—is that it provides parties with one single (relatively) exclusive dispute resolution system for settling all their disagreements. The New York Convention (as implemented in various national arbitration regimes) plays an instrumental role in achieving that objective.

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