What is International Commercial Arbitration?

International Commercial Arbitration

As companies venture into foreign markets, they may come across legal conflicts stemming from variances in laws, regulations, business customs, linguistic and cultural barriers, and misunderstandings. To address such issues, companies may need the support of legal experts who specialize in handling cross-border disputes.

This piece aims to delve into the concept of international commercial arbitration, its mechanics, and how it stands out from other methods of resolving disputes.

What is International Commercial Arbitration?

International commercial arbitration is a process of resolving disputes between parties in different countries through an arbitrator or a panel of arbitrators. It involves submitting the dispute to arbitration instead of pursuing litigation in a court of law. The arbitrator or panel of arbitrators will make a binding decision on the dispute.

International commercial arbitration can be used to resolve various disputes, including those related to contracts, intellectual property, investments, and construction. It is often used in cases where the parties involved in the dispute have a commercial relationship and wish to maintain a working relationship after the dispute is resolved.

How Does International Commercial Arbitration Work?

The process of international commercial arbitration typically begins with the parties involved in the dispute signing an arbitration agreement. This agreement outlines the terms and conditions of the arbitration process, including the rules of procedure, the choice of arbitrator or arbitrators, and the place of arbitration.

Once the arbitration agreement is signed, the arbitration process can begin. The arbitrator or panel of arbitrators will hear evidence and arguments from both sides and make a decision on the dispute. This decision is final and binding, and can only be challenged in limited circumstances, such as if there was a serious irregularity in the arbitration process or if the decision is contrary to public policy.

International commercial arbitration is governed by various international conventions and national laws, including the United Nations Commission on International Trade Law (UNCITRAL) Model Law on International Commercial Arbitration. This model law provides a comprehensive framework for the conduct of international commercial arbitration proceedings.

Advantages of International Commercial Arbitration

There are several advantages to using international commercial arbitration to resolve cross-border disputes. 

• Arbitration is often faster and more efficient than traditional litigation. This is because arbitration proceedings are usually less formal and more flexible than court proceedings, which can be time-consuming and costly.
• Arbitration allows the parties involved in the dispute to choose their own arbitrator or panel of arbitrators. This means that the parties can select an arbitrator or arbitrators who have expertise in the subject matter of the dispute, leading to a more informed and fair decision.
• Arbitration is often more confidential than traditional litigation. Court proceedings are usually public, which means that sensitive information about the parties involved in the dispute can be made public. In contrast, arbitration proceedings are usually private, which means that the parties can keep the details of the dispute confidential.
• Arbitration awards are easier to enforce across borders than court judgments. This is because most countries have signed the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, which provides a framework for the recognition and enforcement of arbitration awards in different countries.

Conclusion

If you are interested in pursuing a successful career in international law, Pepperdine Caruso School of Law's Master of Laws (LLM) in International Commercial Arbitration could be the ideal path for you. This program equips students with specialized skills and comprehensive knowledge of international commercial arbitration. To take the first step towards your professional aspirations, it's recommended that you research Pepperdine University's LLM program in International Commercial Arbitration.