International commercial arbitration offers a flexible,
enforceable method of dispute resolution.
International commercial arbitration is the dispute resolution
process of choice for international contracts as it is tailored to
suit the circumstances of parties located in different States, and
most importantly because it increases the ease of enforceability of
What is arbitration?
Arbitration is a type of dispute resolution process. Instead of
the parties' dispute being determined by a judge in a court (or
by some other dispute resolution process) the dispute is determined
by a privately appointed arbitrator or arbitral tribunal. The
arbitrator delivers an "award", which may be
enforced as a judgment of a court.
Why is it easier to enforce an arbitral award than a
A successful outcome in a dispute is not just about winning the
case, it is more importantly about being able to enforce the
decision and recover the money awarded. This can be a particularly
difficult exercise when your opponent's assets are located
In such circumstances, enforcement of arbitral awards is
significantly easier than enforcement of court judgments as a
result of the operation of the United Nations Convention on the
Recognition and Enforcement of Foreign Arbitral Awards (
New York Convention), which has been ratified by Australia and
over 140 other countries (including Australia's major trading
The New York Convention only allows very limited grounds upon
which the courts in Convention countries can refuse the enforcement
of a foreign award, thereby setting boundaries for domestic judges.
This is in stark contrast to the invariably complex and uncertain
process of seeking to enforce a foreign judgment, which is a
process that varies from jurisdiction to jurisdiction and is far
more vulnerable to interference by national courts.
What are some of the other potential advantages of
The arbitral process also offers a number of other potential
Neutrality: arbitration can overcome the often perceived
disadvantages of having a judge in the courts of one party's
home jurisdiction deciding the dispute between the parties. In
arbitration, a neutral person from a different jurisdiction can be
appointed to determine the dispute as an arbitrator.
Choice of decision-maker: arbitration allows parties the
opportunity to choose arbitrators that have suitable qualifications
and experience in the area that is the subject of the dispute
(which may not always be the case when a judge is assigned to a
Flexibility and speed: in arbitration parties have a great
degree of flexibility to tailor the procedure to suit their
particular contract and needs and to ensure (so long as all those
involved are willing) that it proceeds as quickly as possible.
Arbitrators are not usually bound by the local rules of
Confidentiality: the parties can agree that the procedure and
outcome of an international arbitration are private and
What do other market players think about arbitration?
The results of a study (sponsored by
PricewaterhouseCoopers) into the attitudes to arbitration of
in-house counsel in some of the biggest corporations in the world
show an overwhelming preference for arbitration for cross-border
86 percent of in-house counsel interviewed said that they were
satisfied with international arbitration;
arbitration is the default dispute resolution mechanism in the
insurance, energy, oil and gas and shipping industries;
there is a high levels of compliance with arbitral awards.
Enforcement proceedings were only required in just over 10 percent
of cases, and if required the awards were usually enforced within
one year. Enforcement was ranked as the most important advantage of
arbitration in an earlier PricewaterhouseCoopers study in
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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This was an interlocutory decision about the appointment of a tutor for the child appellant, to carry on his proceedings.
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