Critically Discuss The Role And Importance Of Intenational Commercial Arbitration As An Alternative Dispute Settlement Mechanism In International Trade Today.

3024 words - 12 pages

International trade contracts can give rise to disputes, which need resolution. This can be done through a process of litigation, or arbitration, to mention just two methods. Certain issues however, need to be taken into consideration when using either of the two methods for dispute settlement.Many businesses in recent times have preferred to use the latter method of arbitration. This has in many cases become the norm. It has also been suggested, the increased use of arbitration as a mechanism of dispute settlement is due to the perception it has significant advantages over the former method. 'In the recent past international commercial arbitration owing to its advantages over litigation in a national court has emerged as an effective alternative dispute resolution device for the settlement of transnational disputes'. (Vibhute 1998).Thus, it is pertinent to mention the issues relating to litigation as a form of dispute settlement, to place in perspective the role of international commercial arbitration as an alternative means of settling disputes in international commercial trade.The litigation process is rather complex and even when deciding where the case is to be heard can be problematic. Questions such as, whether the plaintiff's chosen court has jurisdiction, or which other courts also have jurisdiction need to be addressed first and foremost. This in itself can be problematic as there may be numerous locations that may be able to hear the case. Consider the following example, a San Diego business orders goods from the India. The goods will be taken by truck from Delhi to Rotterdam where they will be loaded on board a ship bound for California if something were to go wrong in the transaction, the courts of San Diego, Germany or India could hear the case, but so could any other country's, whose coastal waters the ship happened to pass through. It is apparent from even such a brief example managers would prefer to reduce the number of locations that may hear a lawsuit involving their international transactions. To resolve an issue such as this, a 'choice-of forum' clause may be included in the contract, however this is only as good as the chosen court's willingness to enforce the lawThe next consideration in litigation is, which law is to be applied to resolve the dispute. However, many contracts do now also include a 'choice-of-law' clause. Here they specify which state or country's law will govern the obligations of the parties. The whole process of litigation can nevertheless be costly and lengthy, which perhaps goes some way to explain the preferred use of arbitration over litigation for dispute settlement.The advantages of arbitration are many, these have been highlighted by the ICC (International Chamber of Commerce) International Court of Arbitration on their website, the ICC states, decisions are 'final' and binding', or as described in different terms by Schmitthoff (1990), businessmen prefer 'finality to meticulous legal accuracy'....

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