With the ever increasing amount of global trade and investment, businesses are more focused than ever before on the need to find a suitable means for resolving international commercial and investment disputes. Historically, parties often resorted to national court systems and the party with the most bargaining power was able to insist on the application of its national law by its own national courts in the event of a dispute, thus placing the other party at a potentially significant disadvantage. Today, businesses are more sophisticated and often seek to find a neutral venue and means for resolving international commercial and investment disputes, such as international arbitration.

One of the main characteristics of international arbitration is the notion of party autonomy. This means that parties to an international commercial transaction can fashion the dispute resolution clause in their contractual agreement to provide for international arbitration in a way that meets their particularized needs. Arbitration is a private dispute resolution process where parties agree in writing to submit their potential disputes to an arbitral tribunal, usually comprised of one or three arbitrators, instead of using a national court system. Such proceedings are typically more flexible and informal than court proceedings. The parties agree on the law that will apply and the location where the proceedings will occur, both of which are often chosen from a neutral jurisdiction, as well as the arbitral rules that will govern the proceedings, and even the language in which the proceedings will be conducted. The arbitration can be administered by well established international arbitral institutions like the International Chamber of Commerce (ICC), the International Centre for Dispute Resolution (ICDR), or the London Court of International Arbitration (LCIA), or can be conducted ad hoc according to procedures specified by the parties or established by the arbitral tribunal.

The arbitral tribunal hears witnesses and receives other evidence and legal arguments presented by the parties during hearings conducted in a private setting and renders a binding decision on the dispute. The tribunal renders its decision in the form of a written award that, if it complies with the New York Convention on the Recognition and Enforcement and of Foreign Arbitral Awards, can be executed and enforced in many countries throughout the world. This means that arbitral awards are typically far easier to enforce internationally than judgments obtained from national courts because there are very few international treaties concerning the enforcement of court judgments. As a result, a party seeking to enforce a court judgment in a foreign jurisdiction must often undergo a lengthy process which involves commencing new legal proceedings in the country where the judgment is sought to be enforced. Arbitral awards also have more finality than court judgments due to the limited ability to appeal such awards. In summary, international arbitration provides a fair, efficient, and cost effective means of resolving disputes arising from international trade and investment.

For a more in-depth assessment of the benefits of international arbitration, please read the 2008 PWC Queen Mary International Arbitration Survey.