Rationale for selecting arbitration as a method for dispute resolution by Vanshika Chauhan at LEXCLIQ

The rationale frequently given for arbitration is greater speed, lesser cost, a more professional decision, and greater confidentiality. According to Sato, granted that business-related disputes are propelled by economic interests and that the primary concerns of the trader is to maintain the business relationship, the most credible motive would be, to a certain extent, that arbitration should proffer the prospect of settlement through concession and modification of the relationship for a better future. A harmonious means forward assisted by a convincing decision. Arbitration could be considered an essential concerted channel as well as a contractual instrument to resolve a momentary predicament occurring at some point in business dealing, involving the support of a third party, as an extension of once impasse business negotiation. Specifically, those business communities, which are involved, such as association of foreign trade, often arrange their own arbitration institutions and provide standard provisions on arbitration to be integrated into business contracts. Such convergence could make arbitration more effectual by offering the proficiency required for enhanced and more appropriate solutions. For that reason, party self-sufficiency and efficacy are significant elements for businesspersons in selecting arbitration as a method of dispute processing. Buchanan states:

“In the realm of international commercial transactions, arbitration has become the preferred method of dispute resolution. Arbitration is preferred over judicial methods of dispute resolution because the parties have considered freedom and flexibility with regard to choice of arbitrators, location of the arbitration, procedural rules for the arbitration and the substantive law that will govern the relationship and rights of the parties”.

 

As a consequence of the incomparable growth of global trade and investment, International commercial disputes increase and business undertaking of every type can find themselves entrapped in legal actions with foreign companies. Every so often, before far-off and insensitive tribunals that expense of proceedings and cost of losing are often sizeable. There are numerous grounds why similar disputes can have substantially dissimilar conclusion in different for e.g., Procedural, choice of law, substantive, and other legal rules diverge from one country to another. The nature, proficiency, and veracity of tribunals also diverge significantly among various fora. Other factor such as inconvenience, local favouritism, and language, may make a specific forum much more sympathetic for one party than another. All these disparities are typically more apparent across international borders than within national political systems. On account of the significance of forum selection, parties to international contracts habitually incorporate contractual dispute resolution provisions in the agreements to extensively decrease the doubts intrinsic in international commercial disputes and achieve a sizeable degree of genuine partisan advantage. Arbitration clauses have turned into practically universal in international business contracts and international contract arbitration has been rising rapidly. International business operators choose international arbitration over litigation as it persistently offers greater impartiality protection by preventing submission of the dispute to the national courts of one the contracting company. Since privacy, flexibility, and freedom rule international arbitration, the parties are allowed to shape the arbitral procedure to their requirements, and to select the place and the language of the arbitration.

“Arbitration provides the disputants with a flexibility, which they can never obtain in a court setting”. A lot of legal representative and clients consider that the existence of an arbitration provision in an international contract offer some guarantee that the contract will be executed in unity with its provisions as parties may be more hesitant to arbitrate than to litigate in a unfamiliar state forum where one party would have a home advantage.  Consequently, in choosing to arbitrate an argument, drafters of the provision must confirm that the arbitration result or awards will not be ignored by the courts of the country in which a judgment may be enforced. Moreover, predominantly in the international context, they must realize that resolutions of dispute by institutional arbitration are to some extent more willingly respected by national courts than those running outside the recognized institutions. The rules regularly used within institutional arbitration are the rules of the United Nations Commission on International Trade Law or UNCITRAL thus more countries acknowledge the enforceability of international arbitration.

 

 

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