International arbitration, a trusted tool with a rich history

When talking and getting into conversations with people outside the small world of international arbitration, I often get asked that sacrosanct question, Hey, so what is international arbitration? Like if it were something quite weird or evilish, created by someone in Mount Doom (from the Lord of the Rings). Created for the sole benefit of stripping out the judicial power of Courts.

However, international arbitration is just a simple way to resolve disputes, it is just a tool or a mechanism. Which has been around us from quite a lot of time, possibly more than 200 years now. For example, before the US having a Supreme Court, it first started with a type of Arbitration Court to solve disputes between the thirteen colonies. And made as well its way first into the resolution of international disputes between states, there is a huge work made by A.M. Stuyt, regarding international arbitrations, you will see a lot of interstate arbitrations, not only the famous Alabama Claims between the US and the UK, which where resolved in Geneva. Then there is a progression of arbitration being adopted by countries to resolve commercial disputes, the example is the UK Arbitration Act of 1889, then the creation of an institution that of the London Court of International Arbitration.

Afterwards, you have the creation of the Permanent Court of Arbitration in 1899 its reforms in 1907, and then the creation of the ICC with its International Court of Arbitration, which is celebrating 100 years now. The idea again was to resolve disputes between commerce people. From an international vantage point.

We can say that international arbitration is a trusted tool to resolve disputes between states and also between commerce people. In the 1930s, there was also the possibility to sue states by individuals; an example is the RCA case v China under the rules of the Permanent Court of Arbitration. Later on, there was a more institutionalized movement to create an institution that could administer disputes between foreign investors and states receiving investment, created under the auspices of the World Bank, or ICSID, the International Center for Settlement of Investment Disputes.

So, we can say at least that international arbitration has been around quite some time and has been applied to resolved inter-state disputes, as well as disputes between individuals (mostly in commercial disputes) and as well to solve disputes between foreing individual investors and states.

What created the possibility to have a robust international arbitration “system“, was the enactment of instruments that help in having a more streamline process when international awards were issued by the Arbitral Tribunals, in this case it is in my perspective the famous New York Convention of 1958, which eliminated the double exequator, that is the necessity to be recognized in the country where the award was issued, and then to be recognized in the country where the award was sought to be enforced. With that the process was much easier, but the second obstacle was how the national courts will behave with such international awards, therefore UNCITRAL published a model law in 1985, so it was easier for countries to have a road map for the adoption of rules that could regulate not only the recognition of international awards, but as well to regulate international arbitrations.

Afterwards, more countries adopted or created their own rules for international arbitration, as well as centers for the administration of international arbitrations, which can be counted in the hundreds right now. The list is huge and keeps growing time after time. Thus, international arbitration can be said to be a trusted tool to resolve international disputes that has been around for quite some time.

This was a small historical perspective on international arbitration; later we will delve more into what international arbitration is. The element is what is international and what is arbitration. If you want to know more about international arbitration and international dispute settlement, follow us for more news and insights.