Understanding Commercial International Arbitration: Benefits and Drawbacks (Full Transcript)

Speaker 1: Commercial International Arbitration is an alternative dispute resolution, where the disputing parties agree to appoint an impartial arbitrator, based on his expertise and reputation, to decide a commercial dispute, by means of a final and binding award. Arbitration is considered to be international. When the parties, facts or the legal matter, extend beyond a single jurisdiction, the distinction between domestic and international arbitration, is important as it will affect the enforcement of the award. On the other hand, arbitration differs from other types of dispute resolutions. As the arbitrator is selected by the parties, and unlike mediation and conciliation, the arbitrator not only resolve the dispute, but he also makes a binding decision. Arbitration disputes, usually arise from a variety of business deals, such as merger and acquisition, financial services, construction and infrastructure, intellectual property, and purchase and sale agreements. Arbitration is chosen by the parties, because it offers the following benefits, over local state courts. First, the parties are free, to select the place of the arbitration. Second, the arbitrator is neutral, independent, and impartial party, which means an unbiased dispute resolution. Third, the proceedings are conducted in private, and confidential manner. Furthermore, the arbitration award is final, with no right of appeal, which saves the parties time and money, when compared to courts lengthy appellate proceedings. Finally, the cross-border acceptance, of an arbitration award, is supported by international treaties. As a result, the arbitration award, can be easily enforced abroad. Unlike a foreign court judgment, however, despite being fast and effective, arbitration can have the following disadvantages. First, the arbitration technical nature, can lead to delays, and uncertain results. Second, the arbitrator power is limited, as he can not order pre-emptive injunctions, which can be only granted by the state courts. The arbitration confidentiality, cause a lack of transparency, which makes the process subject to bias. In addition, when the losing party does not comply with the award. The enforcement rely on the state court help, where confidentiality is lost. The finality of the arbitration award, means that a wrong decision, cannot be corrected nor appealed. In addition, arbitration is expensive, especially the arbitrator fees, and expert technical reports. And lastly, arbitration may not be suitable, where there are several parties to a dispute. Unlike in projects and construction claims, where a single dispute may involve different companies, working on the same deal.