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An Overview of International Arbitration

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Fortis Law’s lawyers’ article on “An Overview of International Arbitration” has been published and featured in the Asian Legal Business.

Authors: Patrick Tan, Andrew Goh, Kaden Goh

In the age of globalisation, the number of disputes arising from cross-border trade agreements has increased as more business is transacted across multiple countries. Amongst the different avenues of resolving disputes, international arbitration has gained popularity in recent years. This article serves to introduce international arbitration and highlight its key advantages.

What is International Arbitration?

International arbitration allows parties with a valid arbitration agreement to resolve disputes without resorting to court proceedings. This provides parties with more autonomy, as parties can select their own arbitrators and even appoint relevant experts as arbitrators.

Awards (i.e. the decision of the arbitral tribunal) are final and binding on the parties involved, allowing the successful party to enforce the award against the unsuccessful party. This is where international arbitration demonstrates its prowess in handling international commercial disputes.

Enforcement is usually an issue in cases regarding cross-border trade agreements as parties are generally from different countries, or the business is conducted in a different country.  However, a court order from one country might not be automatically recognised and enforced in the other country where the unsuccessful party’s assets are in. This results in the successful party having to undergo further inconvenience before being able to enjoy the fruits of the lawsuit.

International arbitration does not face the same issue as the award can often be readily enforced in multiple countries. For instance, over 140 countries of the world are members of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, and an award made in any member country is recognised and can be enforced in other member countries, albeit subject to their respective laws.

Key Advantages of International Arbitration

Award Enforcement

As mentioned above, a key advantage of international arbitration is that the arbitral award can be readily enforced in multiple countries.

Flexibility

Unlike litigation, parties can select or draft the procedural rules governing the arbitration instead of being bound to follow domestic legislation and rules binding national courts.

Furthermore, parties can decide where the dispute will be heard, i.e. where the seat of arbitration is. Although there is generally no limitation in selecting the seat of arbitration, parties should consider the enforceability of an arbitral award from the chosen seat during this selection process.

Neutrality

There are occasional fears that national courts might be biased when the dispute involves a party or subject matter from the same country. These fears can be allayed in international arbitration, as parties can appoint arbitrators from different countries and select a neutral country as the seat of arbitration.

Privacy

International arbitration maintains the privacy of the dispute and parties involved. Details of the arbitral proceedings are kept private and the award made is not disclosed to the public or any third party.

Conclusion

Going forward, parties involved in cross-border trade may wish to consider international arbitration as an avenue of dispute resolution, and consequentially enter into an arbitration agreement if they wish to arbitrate future disputes.

Written by:

Patrick Tan, Andrew Goh and Kaden Goh

Contact number: 6645 4510