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Introduction to international arbitration

Introduction to International arbitration

In order to understand international  arbitration First we have to understand the meaning of arbitration. Basically arbitration is a process, other than formal court proceedings, by which disputes are resolved. In the process of arbitration third party is involved to resolve the dispute between the parties and that third party is called as an arbitrator to whom the power is handed over. The definition according to section 2(1) (a) of The Arbitration and Conciliation Act, 1996 says that even if the arbitration is not administered by the permanent arbitration institution then also it will be considered as an arbitration.

Definition of international commercial arbitration is provided under section 2 (1) (f) of The Arbitration and Conciliation Act, 1996. Under this definition one of the parties to the dispute shall be resident of country other than India or body corporate incorporated outside India or company whose management is outside India or government of any foreign country.

It is to be noted that under international arbitration parties to the dispute belongs to the different countries and these parties are bound to refer the dispute to the international arbitration tribunal.  The reasons for the steadily growing practice of submitting these disputes to arbitration may vary from case to case. One of the most common explanations for such a practice is that rather than permit international disputes to be settled in national courts, many parties often prefer to submit them to a tribunal that is not part of the governmental structure of a particular state.

Nowadays most of the parties prefer to refer the matter to arbitration due to the process it follows. Its process is less tedious than the long complicated process of formal courts. Also from the perspective of international arbitration, it is easy to enforce foreign award in the domestic court rather the court judgement of The International Court. Also parties prefer to submit the dispute to the International Tribunal rather than deciding it through national courts which can sometimes lead to unfair decisions due to biasness. There are very less chances of international tribunal or courts of being biased as compared to national courts, very often foreign countries face biasness in National courts if they resort to the remedy provided to them in the national courts. The increase in preference of arbitration, internationally as well as in national sphere is commendable.

In international transactions, arbitration also offers the advantage of a tribunal composed of decision makers from different countries which are likely to apply rules of decision that will be acceptable on a transnational level. International arbitration awards, based as they are on consent to submit to the authority of the arbitral tribunal, are likely to receive a greater measure of enforcement and recognition on the international level than are judgments rendered by national courts. Recent international conventions have enhanced international recognition and enforcement of such awards. The relative efficiency and inexpensiveness of international arbitration, as compared with litigation in national courts, are two significant factors, which have contributed to its rapid growth.

  • section 2 (1) (f)
  • definition
  • growth of arbitration

BY : Abhilasha

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