Arbitrary and international arbitration – one of the alternative dispute resolution

My dear colleagues I would like to return to my research about alternative dispute resolutions. This time I would like to introduce arbitrary as a potential solution in conflict situations.

Personally, I think being familiar with arbitration it is very important especially for us law students. As we all think about our areas of specialisation and our graduate employment. Alternative dispute resolutions are always interesting and can help you become a great law student better a understanding legal terms. I am sharing this piece with you, my peers, because I believe we can all excel and attract potential employer with extra interest in wider law related matters.

Arbitrary is a different process than mediations and negotiations. The dictionary describes arbitration as a course of action or a decision that is based on personal will without regard to rules or standards. It is not based on reason or judgment.

I would like to look closer for the international arbitration and its understanding. The arbitration as a method of domestic dispute resolution is known to have taken place as far back as ancient periods, where arbitrators were chosen based on their esteem within the community. The concept of international arbitration however, formed in early 1306 when a royal advocate in Normandy proposed the Cursader states us arbitration as a means of the establishing peace throughout Europe before setting off for the Holy Land.

It took until at least the late 19th century for something akin to international arbitration, as we know it today, to formulate. Eventually, things really kicked into gear in the 1920s with the establishment of both the ICC (the International Court of Arbitration of the International Chamber of Commerce based in Paris) and ICDR (the International Centre for Dispute Resolution, New York). The LCIA (the London Court of International Arbitration), founded in 1892, was ahead of the curve.

International arbitration permits companies can sue nations that they believe have been discriminated against and have thus hurt their profit margins. This is called Investor-state dispute settlement.

The appeal of ISDS for governments is that commercial disputes can be resolved in a theoretically neutral arena without direct conflict with another state. They can attract more investment from overseas companies with this safeguard in place. Critics, however, argue that ISDS grants too much power to companies and allows them to challenge the policies of elected governments. In perhaps the most famous example of this, tobacco giant Philip Morris controversially sued multiple countries over laws prohibiting smoking or the promotion of it.

International arbitration is a big deal

The largest ever award resulting from international arbitration – the Russian Federation was ordered to pay more than $50 billion to former shareholder of the Yukos Oil Company after it had destroyed the corporation and appropriated its assets – the $64.2 million in additional feed the Russians were ordered to pay out.

Simply, arbitration is a method of dispute resolution between two or more parties who agree to have their cases heard and settled by an independent tribunal through a pre-determined procedure.

Arbitration is determining an appropriate argument for the one side and also is awarding one side. It can be enforced through the New York Convention and have wide reaching implications.International trade deals typically include a method through which ISDS can be initiated. Chapter 11 of The North American Free Trade Agreement (NAFTA) between Canada, the USA and Mexico allows for companies to bring international arbitration proceedings against any of the three countries; an ISDS clause was also established in the Trans-Pacific Partnership. The USA’s proposal to include a similar clause in the much-criticised Transatlantic Trade and Investment Partnership (TTIP) with the EU was a major stumbling block in negotiations. Some have argued that throwing the door open to ISDS would allow American private healthcare companies to sue European countries, including the UK, where publicly-funded healthcare is the norm.

A few words about Brexit

Regardless of the future relationship between Britain and the EU, the ability to pursue international arbitration and enforce its results will be unaffected from a legal perspective. The potential change in commercial fortunes for either side is a different matter – if business slows down, the number of arbitration cases brought forward could rise or dip depending on a whole host of factors. Overall though, the message to take away is Brexit may mean Brexit, but it doesn’t mean a whole lot in an international arbitration context.

Read more on arbitration for beginners.

Written by:
Anna Augustyn – OULS News Reporter



Leave a reply

©2019 Open University Law Society

Log in with your credentials


Forgot your details?