I come from Mexico, and when you say arbitration, clients truly think that you are an actual referee in a football match or soccer for the misguided. I’ve being asked if I do International Arbitration why I haven’t been in the news as a referee on football matches, my answer is that hopefully one day.
That is why, when with clients I underline the word commercial arbitration, but the example of a referee of a football match resembles really well the reality of commercial arbitrations, two parties in a match will follow the findings of a neutral in the field (like it or not, even if you yell at the referee). However, instead of blowing a whistle, the determination can come in the form of a written arbitral award.
In essence, Commercial Arbitration can be understood as the process between two or more parties that agree to resolver their actual or future disputes under arbitration before an Arbitral Tribunal in order for such tribunal to render a final and binding decision.
This brief definition gives in many respects what to expect from arbitration, and in more concrete terms with commercial arbitration.
Such elements can be the following:
1 Two or more parties, which means, there can be a classic two party case with one claimant and one respondent, but it can be also multi-party.
2 It is a process.
3 You need to have an arbitration clause or an arbitration agreement as a separate contract.
4 Such agreement can be for the resolution of current or future disputes.
5 The decision rendered will be through a final and binding award (although you can agree having an appeal), by a third party neutral to the dispute.
6 The Arbitral Tribunal, which can be composed by a sole member or a three member tribunal, is a third party neutral to the actual dispute.
I know this can be quite basic but the aim is to have a general idea.
Later on we will discuss what to look for when drafting successful dispute resolution clauses, the core elements and optional elements.