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International Arbitration: Important Issues to Consider

August 9, 2016

International arbitration is a form of resolving disputes outside of the traditional courtroom setting that allows the parties to work together to reach a workable solution to their dispute. It has been regarded as a powerful way for both sides to save valuable resources on resolving conflicts. Through arbitration, time and finances that would be devoted to lengthy litigation processes can instead be devoted to other objectives, such as corporate governance or compliance research.

As with domestic arbitration, international arbitration involves a number of built-in challenges and complex issues, such as those related to forced arbitration clauses and choice of venue.  However, there are also a number of factors and challenges that are unique to international arbitration as a practice. In order to succeed in an international arbitration setting, it is important to understand some of the unique characteristics of international arbitration.  

Key Factors to Consider in Relation to International Arbitration

In an address to the Chartered Institute of Arbitrators Australia, Sydney barrister David Jackson highlighted key challenges arbitrators face, and how arbitral procedures differ from those of court proceedings. Two main challenges to consider in relation to international arbitration include:

  • Differences in backgrounds between the arbitrators: These can include a host of language, cultural, and legal practice differences. For instance, arbitrators from one region may be accustomed to being vocally silent during the process, preferring written admissions, while others might favor oral arguments.
  • Application of relevant laws: Arbitration rules may be determined through varying means, such as an arbitration agreement, or through adopted procedural laws in the venue’s location. Thus, participants need to be especially aware of applicable procedures and how these can be used to the client’s advantage.

As we will see, these two factors are playing a major role in the selection and development of new arbitration centers around the world.

International Arbitration Roundup: Developments Around the World

In recent years, international commercial arbitration has taken an increasingly more important role on the global stage. We are seeing many international arbitration centers and venues being developed in order to facilitate more arbitration activity.

For instance, Miami is establishing itself more and more as a main hub of international arbitration. Sandra Friedrich, head of the international arbitration law program at the University of Miami, cites two main reasons why Miami is developing as a hub for international arbitration. These two reasons perfectly echo David Jackson’s two main points.  

First, Friedrich states that Miami’s multilingual workforce is ideal for Latin American countries, which have major business dealings with North America, Europe, and Asia. This makes Miami a natural destination for dispute resolution.

Secondly, she also states that Florida’s legal framework is “favorable” to international arbitration processes. For instance:

  • Florida has adopted the U.N.’s model law on international commercial arbitration
  • The Florida State Bar allows lawyers from anywhere in the world to practice international arbitration in the state

As a result of all these factors, we are seeing the opening of more and more international dispute resolution offices in the state. In other international arbitration news:

  • India has recently pushed to make Delhi a global hub for international arbitration. The government wants arbitration cases involving Indian companies or the Indian government to be handled inside of the country. Currently, many of the arbitration cases between international entities and Indian companies are handled in London or Singapore.
    This is part of larger efforts on the part of the Indian government to push Indian legal bodies to accept the entry of foreign law firms and lawyers. In other South Asian international arbitration news, India has lost a major arbitration case against Devas Multimedia Private Ltd. in connection with a space/satellite contract.
  • The Congress of the International Council for Commercial Arbitration (ICCA) recently held its 23rd Congress in Mauritius. ICCA is the largest regular conference addressing international arbitration; this is the first ICCA Congress held in Africa. Speakers at the Congress highlighted possible avenues which could improve international dispute resolution processes. These include increased transparency, a coherent development of case law, and the possible establishment of an appellate arbitral body.
    The country of Mauritius is also being eyed as a potential leader for international arbitration in Africa. Mauritius’ international arbitration framework is considered to be clear, predictable, and in conformance with the UNICITRAL Model Law.
  • Many doubts and criticisms still hang in the air in the wake of the recent South China Sea arbitral tribunal ruling. Questions remain as to whether the tribunal’s ruling constitutes valid international law (China insists that the tribunal has no jurisdiction). The overall situation highlights not only the importance of the rule of law being applied to the arbitration hearings, but also whether the rulings themselves can hold up under international law principles.

Thus, we can see that international arbitration is a global endeavor that needs to account for various factors not typically accounted for in the court adjudication system. Navigating the process requires both a broad overview of global laws as well as a deep understanding of individual issues. If you have any immediate questions, concerns, or needs related to arbitration in a domestic or international context, contact us today at KTMC.