International Commercial Arbitration

As Entities have started to venture into foreign markets, they can face legal conflicts owing to contradictory ways of doing business, laws, regulations, linguistic & cultural obstacles, and misunderstandings. We have legal experts specializing in ‘International Commercial Arbitration’ to deal with such issues—the technique to resolve disputes between parties of distinctive countries through an Arbitrator or Panel of Arbitrators. The process is all about resolving various disputes, such as contracts, Intellectual Property, construction, investment, and more.

Commercial Arbitration at the International Level provides flexibility in Dispute Resolution. The process allows parties to opt for arbitrators, the laws which are applicable, and language proceedings. Such a system allows the parties to customize their arbitration process as per their requirements and ensure effective dispute resolution. The process is all about the enforceability of arbitral awards across several jurisdictions. The process is crucial for resolving disputes that go beyond national borders by accelerating cross-border business transactions.

Definition of International Commercial Arbitration

When parties from different nations involved in a dispute want to resolve conflicts and disputes between them via mediation instead of the traditional court system, the method is called International Commercial Arbitration. The process includes an arbitrator (an impartial third party) who issues a binding decision after hearing arguments from both sides. We have the agreement of the parties involved, national laws, and international conventions that govern this procedure.

Scope of International Commercial Arbitration

The process of ICA addresses a wide range of disputes, such as Construction Conflicts, Contract & Intellectual Property Disputes, and joint venture disagreements. The government can establish Arbitration tribunals in any province. Thereby, parties can choose any venue as per their requirements, allowing them to deal with conflicts in countries with uncertain legal systems. With this methodology, businesses can protect Trade Secrets and maintain business relationships since the proceedings are conducted in privacy. Under the New York Convention, awards that ICA renders are enforceable in 150+ countries.  

Features Of International Commercial Arbitration

1. Cost Effectiveness

The ICA process is a cost-efficient process as compared to litigation, especially in complex international disputes where costs may escalate owing to procedural delays and discovery processes.

2. Confidentiality

Being a confidential process, the parties have flexible and neutral options as they work on resolving their disputes by keeping their settlement agreement private. Article 30 of the London Court of International Arbitration also supports this feature, prompting businesses to protect their interests and reputation.

3. Customized Procedures

Parties involved in the ICA process have the freedom to agree on arbitration procedures that suit their requirements. This feature prompts a cost-effective and efficient arbitration process.

4. Enforceability

Thanks to the International Commercial Arbitration, the New York Convention of 1958, arbitral awards such as the ICC award from the International Chamber of Commerce, the UNCITRAL rules, etc. are enforceable in more than half of the countries globally. Hence, parties are exempted from expensive and lengthy court proceedings and can rely on arbitral awards to resolve their disputes.

5. Flexibility

The parties have the option to select their arbitrators, relevant laws, and language in which proceedings have to be conducted. Parties customize the ICA process as per their needs.

Drawbacks Of International Commercial Arbitration

1. Costs

Although the ICA process allows parties to minimize costs, there can be situations where expert testimony or extensive discovery is needed or involves legal or technical issues, the ICA can be an expensive process. The Location, Qualifications of The Arbitrator, Length of The Process, and Complexity of Disputes also affect the overall costs.

2. Confidentiality

This feature creates challenges by limiting the abilities of parties to get Evidence and Information, Affecting the Standard of the Decision-Making Process. Third parties like the public or regulators find it challenging to evaluate the fairness of the ICA process since each step is confidential.

3. Lack Of Precedents

Arbitral awards are not binding precedents, unlike court judgements. Arbitrators are not required to follow previous decisions. It causes uncertainty in the interpretation and application of proceedings.

4. Complex Cross-Border Legal Issues

Such complexities arise from different Business Procedures, Cultures, Legal Systems, Languages, etc., Across Various Jurisdictions. Further, such issues can cause delays, misunderstandings, and disputes due to relevant Laws and Procedures.

5. Enforcement Of Arbitral Awards In Certain Jurisdictions

Although Arbitral awards are enforced in 150+ countries, a few Jurisdictions have inconsistent or limited enforcement mechanisms. In such a situation, the ICA process can be ineffective and inefficient.

Arbitration Agreement

As per Section 7 of the Arbitration and Conciliation Act, 1996 – An agreement by the parties where all or a few disputes have taken place or will take place between the parties as per a defined legal relationship, whether it is contractual or not. Such an agreement can be in the form of a separate arbitration agreement or an arbitration clause in an agreement. Such an agreement has to be in writing compulsorily. An Arbitration agreement is in writing if it is a document signed by the parties; an Exchange of Letters, Telegrams, Telex, Emails, or other modes of Telecommunications that provides a Record of this Agreement; or if one party alleges an exchange of claim and defence in which the existence of the agreement and other party does not deny. Also, the reference in a contract to a document that consists of an arbitration clause constitutes the arbitration clause if such a contract is in writing. The reference is such as to make the arbitration clause a part of such an agreement. In an arbitration agreement, parties are required to mention the types of disputes to be covered by the agreement, issues of jurisdiction, and competence along with the law applicable to the arbitration agreement and the substantive dispute.

How Does International Commercial Arbitration Function?

The ICA processes are overseen by arbitral institutions. Such organizations provide guidelines and a framework to follow whenever they admit such disputes to ensure the methodologies are followed in a structured manner. Such institutes provide the required resources to ensure the ICA takes place efficiently. They have lists of qualified arbitrators who assist parties in selecting arbitrators to resolve their disputes. They look after the administrative aspects of such proceedings, such as managing communications and following procedural timelines. Such institutes have their own arbitral rules and procedures that make sure the ICA are conducted effectively. A few prominent arbitral institutions are the Stockholm Chamber of Commerce Arbitration Institute (SCC), the Singapore International Arbitration Centre (SIAC), the United Nations Commission on International Trade Law, the Hong Kong International Arbitration Centre (HKIAC), the London Court of International Arbitration (LCIA) and International Chamber of Commerce (ICC).

Conclusion

The ICA methodologies are a prominent tool for businesses that operate in international market spaces. It is an effective process to resolve cross-border conflicts so that the global economy remains in harmony. It is a flexible and valuable dispute-resolution mechanism. Enterprises can make informed decisions about ways to resolve their cross-border conflicts by understanding the scope and benefits of arbitration.