International Commercial Arbitration
Introduction
Commercial arbitration is a form of alternative dispute resolution (ADR) used in many areas of commercial life, where parties to a dispute seek to resolve the dispute without having to go through the court system. An arbitration is usually conducted with reference to rules or laws, and can also be held before an expert or panel of experts who, acting as neutrals, will work to reach a solution based on the merits of the case. This can often be much more cost-effective than litigation, and in many cases, the parties are able to reach a decision much more quickly than with formal court proceedings.
History
The roots of modern commercial arbitration trace back to ancient times, when disputes among traders and merchants were mediated by specialist adjudicators.ADR appeared in its modern form in the 19th century, when it was recognized as an effective way to resolve a wide range of legal disputes. In the Netherlands, for example, the Dutch Commercial Courts Authorized Arbitrator system was founded in the 19th century, while in England and Wales, the English Arbitration Act of 1898 established a structure for the judicial enforcement of arbitration awards.
Advantages
One of the primary advantages of arbitration is its expediency. Arbitration is often a much faster process than court proceedings, and rarely takes longer than a few weeks or months to complete. This is particularly advantageous for commercial disputes, where the parties need to resolve the dispute quickly in order to continue to operate their businesses.
Arbitration is also beneficial because it can save the parties a considerable amount of money. Formal court proceedings can be both time-consuming and costly, whereas arbitration can reduce the cost of dispute resolution by eliminating some of the associated costs, such as court fees and lawyers’ fees. Additionally, the process itself is usually conducted by an arbitrator or a panel of arbitrators, who can provide a decision based on their own expertise and knowledge of the dispute at hand.
The confidentiality of the arbitration process can also be attractive to commercial parties, as it is not subject to public disclosure. This means that the commercial parties can remain private throughout the process and go about their business without fear of reputational damage.
Disadvantages
Despite its advantages, arbitration can also be seen as a disadvantage to certain commercial parties, as the process also has some notable drawbacks. For instance, in some types of cases, such as intellectual property rights disputes, the jury in an arbitration may be less familiar with the subject matter than those in a court case. This can lead to a decision that is not always in the parties’ favour.
Additionally, the decision of the arbitration panel is generally final and binding, meaning that there is little opportunity for appeal. In contrast, a court decision can often be appealed, allowing the parties the chance to have the decision considered by a higher court.
Conclusion
Arbitration is an increasingly popular form of Commercial ADR, providing an efficient, cost-effective and confidential means of disputes resolutions. While it has some disadvantages, such as the lack of an appeals process and the potential for less familiar jurors, for many commercial parties, the advantages far outweigh the drawbacks. As such, it remains an attractive option for parties looking to resolve their disputes in an expedient and cost-effective manner.
