International commercial arbitration (ICA) is the binding resolution of the merits of business disputes between or among transnational actors through the use of one or more arbitrators rather than the courts.
by Charlotte L. Bynum
Revised November 2010 by Robert G. Cruz, J.D. '11
The use of ICA has grown for several reasons. One or more parties may distrust a foreign legal system or wish to avoid long delays in the court systems. They may desire resolution of the dispute by someone with expertise in their business. They may wish to exercise more control by specifying the rules that will govern the dispute. They may also wish to avoid the current problem of the lack of internationally recognized standards on the enforceability of foreign judgments. There is a proposed Hague Convention on Jurisdiction, Recognition and Enforcement of Judgments in Civil and Commercial Matters, but a number of issues remain unresolved in negotiations. For the European Union member countries, this has been already addressed through Council Regulation (EC) No. 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters.
There are essentially two kinds of arbitration, ad hoc or institutional. Institutional arbitrations are entrusted to one of the major arbitration institutions to handle, while ad hoc arbitrations are conducted independently and without such an organization, according to the rules specified by the parties and their attorneys.
Arbitrations may also be differentiated by those that involve states as a party, and those that do not. Special institutions are available for arbitrations in which states are a party. The Permanent Court of Arbitration [Documents Website at Cornell ]in the Hague was formed to handle arbitrations exclusively involving states, but since 1992 has broadened its mandate to include disputes involving states and private parties, as well as disputes involving international organizations. The International Center for the Settlement of Investment Disputes (ICSID) is concerned with disputes between a state and its foreign investors.
A number of arbitral mechanisms address arbitrations in a particular industry or concerning a particular topic. An example of industry-specific arbitration is the set of the special rules governing construction industry disputes by the American Arbitration Association . The World Intellectual Property Organization (WIPO) Arbitration and Mediation Center and the Court of Arbitration for Sport are examples of topic-specific dispute resolution.