International commercial arbitration

 

International commercial arbitration is the dispute resolution method that possibly benefits the most from the advantages arbitration has over litigation.

The New York Convention

In the past century the area of international commercial arbitration has grown dramatically because of two characteristics which are unique to arbitration.

The first of those is the ability to enforce an arbitration award under any legal system which has signed up to the New York Convention (which includes nearly all UN countries).

The convention makes an arbitration award legally binding under the local law, which means collecting an award from a party which refuses to pay becomes a local matter.

In comparison, when a litigation judgement is entered in one jurisdiction but the paying party is in another, the way to enforce these judgements depends on each nation’s relationship to other legal systems and is much more complex.

Jurisdiction advantage

The second benefit of international commercial arbitration is that the agreement can choose which jurisdiction the contract is governed by.

This is important because every legal system may have slightly different contract laws. When an international contract is signed, it may be impossible to determine which laws apply to the contract.

By including an arbitration clause (which normally states which jurisdiction the contract will be subject to) the parties are able to ensure that the terms of the contract will not be misinterpreted by the courts of another jurisdiction.

What to do next?

International arbitration is essentially voluntary in that all parties to a dispute must agree to its use; however, once agreed, the process is compulsory with no opportunity for parties to drop out.

There are two main international bodies providing model rules for arbitration procedures which particularly appeal in international commercial disputes:

  • The United Nations Commission on International Trade Law (UNCITRAL)
  • The International Chamber of Commerce (ICC)

If you are involved in international commercial arbitration it is important to ensure that you are familiar with all the terms and procedures of the arbitration process. Seeking advice from a solicitor may help you ensure you understand the framework within which you are operating.

Unsure if international arbitration is suitable for your commercial dispute? Contact Law can put you in touch with a commercial law solicitor who can explain the advantages of arbitration over litigation. Please call us on 0800 1777 162 or complete the web-form above.

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