Meaning
Contractual agreement to use a private tribunal to resolve disputes. The international arbitration clause specifies the rules, the venue, the language and the number of arbitrators. It allows businesses to avoid the perceived bias or inefficiency of local legal systems.
Procedural Autonomy
Parties have the freedom to select experts with specific industry knowledge to act as judges. An international arbitration clause grants the power to choose the seat of arbitration, which determines the procedural laws that support the case. This flexibility is a primary reason why shipping and energy companies prefer this method over traditional litigation.
Enforcement Advantage
Awards granted by these tribunals are easily enforced in over one hundred and sixty countries under global treaties. An international arbitration clause makes the resulting decision more portable than a judgement from a domestic court. This global reach ensures that a winning party can pursue the assets of a debtor regardless of where they are located.
Confidentiality Benefit
Hearings and documents in these cases are generally kept out of the public record. An international arbitration clause protects sensitive commercial data and trade secrets that would otherwise be exposed during a trial. This privacy allows companies to settle their differences without damaging their reputation or alerting competitors to internal issues.
