Why Choose International Arbitration?
Disagreement is a sobering yet inevitable reality. Arbitration is a progressive means to resolve disputes across multiple jurisdictions due to the international legal framework that both dictates and protects this form of adjudication. It results from the New York Convention to which more than 130 countries adhere. As a matter of fact, when it comes to a private or an international contract, arbitration proves almost ineluctable due to the reluctance to trust public or foreign courts, especially considering the ease of obtaining homologation of a decision from an arbitration court rather than from a foreign state court. It is widely recognized as the best means for resolving international commercial disputes that arise in most areas of economic activity.
International arbitration poses significant advantages over litigation, court hearings, and trials. Conducted by specialists to the exclusion of courts of law, arbitration allows for a decision which is final and internationally enforceable while protecting confidentiality and maintaining proportionality between the stakes of a dispute and the costs of resolving it.
Certainty and Neutrality Without Hostility
An effective arbitration clause gives parties a degree of certainty in relation to the forum for any disputes. It is particularly useful where there is a cross-border element to the dispute as an effective clause could sidestep entirely the complex rules of private international law governing jurisdiction. Since arbitration is a creature of contract, parties can by agreement design the process to accommodate their respective needs with foresight. The parties also may agree to the specific rules under which the case will be heard, the types of evidence that will be accepted, and how damages, expenses, fees, and arbitration costs should be determined and allocated by an arbitrator.
In arbitration, the parties are able to refer their disputes to a neutral forum. This is often attractive to commercial parties especially if they are wary of referring disputes to the home/foreign courts of the other party. Arbitration will also enable the parties to ensure that the composition of the Tribunal, as well as the seat of the arbitration, and the location of hearings are neutral.
Furthermore, because the parties in an arbitration are usually encouraged to participate fully and sometimes even to help structure the resolution, they are often more likely to work together amicably rather than escalate their angst and hostility toward one another, as is often the case in litigation.
Arbitration allows the timeline to proceed quickly because the disputants and/or involved parties are not subject to the usual delay between readiness for trial and hearing date.
Arbitration typically provides a speedier resolution than proceedings in court. The limited right to appeal arbitration awards typically eliminates an appeal process that can delay finality of the adjudication.
Unlike trials, which must be worked into overcrowded court calendars, arbitration hearings can usually be scheduled around the needs and availabilities of those involved, including weekends and evenings to meet their objectives and convenience. The flexibility of arbitration fosters a relatively informal atmosphere. Together with the privacy of the arbitration proceeding, this serves to reduce the stress on the witnesses and on what are often continuing business relationships between the disputants and/or involved parties.
Court litigation is largely controlled by statutory and procedural rules. The flexibility of arbitration allows parties to tailor procedures to the needs of a particular dispute and to save time and money by choosing a location for the hearing that will minimize costs, by establishing rules and limits for pre-hearing exchange of documents, by interrogating witnesses out of order, via video conference/telephone, or outside normal business hours, by ordering testimony so that all experts on a topic testify directly after one another or even all at the same time, by using written witness statements for some or all of the witnesses in lieu of time-consuming, oral direct testimony, and by delineating the level of detail used in the an arbitration award.
Confidentiality of the Process
Confidentiality is an important feature for many parties in commercial disputes, particularly when dealing with issues involving intellectual property, trade secrets, negligence, fraud, or other potentially damaging subject matter that could jeopardize reputations, client affiliations, or current market positions. Arbitration provides safeguards that often prove to be highly advantageous.
Arbitral hearings are held in a private office building, are attended only by those designated by the parties and their counsel, and are not recorded for public record. The fact that a party is involved in arbitration proceedings is also confidential. Medias, competitors, or simply the curious are not privy to arbitration. In addition, most proper arbitration centers have strict, enforced guidelines and best practices to ensure 100% client privacy.
Arbitration often is less costly than court litigation, primarily due to the compressed schedule for the completion of discovery and trial. In court litigation, significant expenses are devoted to pre-trial discovery processes, such as written interrogatories and depositions of witnesses. In fact, attorneys’ fees are by far the most significant cost of litigation, and they increase in direct proportion with the time taken to obtain resolution on a case.
These are minimized in arbitration because arbitrations are generally concluded in far less time than traditional court cases. The associated costs with arbitration can be recouped quickly because of the increased speed and efficiency of arbitration and the ability to tailor the arbitration to the specific needs of the disputants and/or involved parties.
Arbitrator / Judge Selection
Having the possibility to participate in choosing the arbitrator proves a definite advantage compared with the common law courts. The soundness of any adjudication is largely dependent upon the quality of the arbitrator or trial judge. In the arbitration process, the disputants and/or involved parties select the arbitrator based on technical and/or legal aspects and who know how to conduct adversarial debates.
Any pre-hearing disputes between the parties are decided by the same arbitrator that ultimately decide the case. In contrast, in many courts, no individual judge is assigned to a case and, therefore, multiple judges may be involved in adjudicating pre-trial disputes. The judge is assigned by the court without input from the parties. Thus, arbitration affords the parties the ability to select the ultimate decider, whereas court litigation does not.
A great benefit of arbitration is that the parties can select their arbitrators and form their Tribunal, both under the party appointed system and the list system, and thereby choose arbitrators with qualifications tailored to the needs of the arbitration in question. An arbitrator is selected by the parties and hired similar to hiring any other expert for a company. Unlike formal court, parties can review the arbitrator’s’s credentials, request contact information for recommendations, and even interview the arbitrator.
Arbitrators are selected from a pool of professionals, typically with experience in the construction industry and, therefore, may provide a greater level of expertise than a judge. Such persons should have a greater capability to comprehend project issues and documents and to scrutinize liability and damages claims common to the construction industry than most trial judges. They are selected on the basis of desired characteristics such as subject matter expertise, technical knowledge, reputation for competence, temperament, number of years of experience, number of arbitrations chaired, availability, commitment, and ability to conduct an efficient, cost-effective arbitration.
Simplified Rules of Evidence and Procedure
The often convoluted rules of evidence and procedure do not apply in arbitration proceedings, making them less stilted and more easily adapted to the needs of those involved. Importantly, arbitration dispenses with the broad, burdensome, and expensive procedure called discovery that involves taking and answering interrogatories, depositions, and requests to produce documents, often derided as a delaying and game-playing tactic of litigation.
When in court, judge’s decisions are constrained by statutory and case law and the conduct of the trial is governed by established rules of evidence. In contrast, an arbitrator is actively involved in the management of the case, has considerable flexibility to consider any evidence he/she deems relevant such as promptly conducting a telephonic or in-person supervised session to assure expeditious proceedings, and may issue an award based upon perceptions of fairness or equity and not necessarily on the evidence or rules of law.
Arbitration permits the parties to choose adjudicators with the necessary special international knowledge and experience to decide a cross-border dispute, which is not possible with the unpredictability indicative of the court system. Their unique skill set can include proficiency in more than one legal tradition such as both common and civil law, fluency in multiple languages, maturation, understanding in and ability to harmonize cross-border cultural differences between parties.
In the international context, arbitration provides what in some cases may be the only possible neutral forum for dispute resolution and enables the parties to select decision makers of neutral nationalities or of recognized neutrality who are detached from the parties and their respective home state governments and courts. Thus, arbitration allows the parties to avoid concerns that may arise with respect to some judicial systems, and it assures an adjudicative setting in which bias is avoided and the rule of law is observed.
Arbitral Awards are fair, final, legally binding, and have the force of a court judgment. The decision is drafted into a private contract for the parties to sign and abide by. The opportunities for appealing an arbitration Award are more limited than those relating to court judgments. Therefore, the parties are not plagued with additional delays, worries, and lengthy appeals. An arbitrator’s Award and Opinion can only be set aside or "vacated" for very specific and narrow statutory grounds such as corruption, fraud, and evident partiality or if the arbitrator made an obvious mistake or both parties contractually agreeing to disregard the arbitrator’s decision.
A critical feature of arbitration is the ease of enforcement. The New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards provides an established enforcement regime for international arbitration awards across borders. The vast majority of countries/states have signed up to the New York Convention, and there are very few grounds for a signatory state to refuse to recognize an arbitration award. There is no real equivalent for the enforcement of court judgments, which are often impossible to enforce in other countries. Thus, arbitration becomes an obvious ideal choice.