Breaking Down the Basics of International Arbitration

People, entities, and organizations cannot always be in perfect harmony with each other. Misunderstandings often happen. This may pose a threat to the well-being of everyone. Thus, there is a need for the resolution of the conflict. There are many ways to accomplish this goal. One of them is through international arbitration.

What is International Arbitration?

As the term is self-explanatory, international arbitration is a method of resolving conflicts among individuals or workplaces which are spread across different locations. One of the defining characteristics of this procedure is its ability to allow the parties to bypass the native court process. Furthermore, international arbitration has the intention of enabling opposing parties to settle their issues positively. Rather than ending into a full-blown court case, it can let them reach a compromise instead.

How Does the Process of International Arbitration Work?

International arbitration, as with any other legal procedures, is done through a step-by-step process. However, it is essential to involve a couple of people to meet up in one final try to resolve the issue outside the arbitrary court.

If the two parties do not agree, the process of arbitration can now start. The first step is for the person who is filling for the arbitration. They need to send a notification to the other party.  After this, the latter will get ample time to respond with regards to when the arbitration takes place. The notice will also include decision making on who will preside over it.

Then, the creation of an arbitrary committee (termed as a “tribunal) will take place. The number of people in this committee will be on a case to case basis. After this, the issue that one or both the parties have is open for arbitration. Finally, the decision on the exact time and venue of the arbitration will take place.

Both parties must produce physical copies of the documents which are relevant to the issue in question. Furthermore, they may require the other party to procure other pertinent materials by request. The usual length of time for an arbitration process may vary depending on the severity of the issue put forth. It can be a few hours or several months long.

What are the Pros and Cons of International Arbitration?

Without a doubt, international arbitration can be an effective way to settle conflicts between two opposing groups. However, it is not with its drawbacks. The following list enumerates the good and not-so-good sides to international arbitration.

Pros of International Arbitration

The avoidance of violent behavior between the people/organizations – In an arbitration, the participants have an active involvement in coming up with the resolution to pressing issues on hand. As a result, there is a high chance that they will attempt to come up with a peaceful solution to the problem rather than to treat each other with hate and anger.

Flexibility – As opposed to regular court hearings, the arbitrary meeting is flexible. Court hearings, on the other hand, require the participants to change their schedule to suit the court schedule. Those who are in it can schedule the meeting to fit their time and availability best.

Privacy – Arbitration procedures are more often than not held away from the eyes of the public. Furthermore, its results remain between the two involved parties. So, there is a great assurance of fewer chances for sensitive information leaking out.

Cons of International Arbitration

Hard to Change Arbitrary Decision – In the process of arbitration, decisions regarding the issue are pretty much considered “final and irrevocable.” Thus, if the arbitrator happens to favor one party, there is little hope for the aggrieved party to change the decision, thereby leaving them no choice but to comply with it.

Imbalance of Power – Sometimes, the adage “power is everything” may be apt for the process of arbitration. When faced with such concerns, big institutions or companies may use their power to force the other party to back down from discussing the issues.

Shady Proceedings – Although the privacy, which is a characteristic of arbitration is good, there are times when it also becomes negative. Since it usually happens behind closed doors, there is a risk of it being unfair (due to the proceedings not being public). Add to this sobering fact the tendency of courts not to look up the results of the arbitrary procedure that frequently.

Most organizations would rather avoid court proceedings. In situations like this, international arbitration comes in.