Much of what I get asked, is why international arbitration became so popular during the last twenty years. And possibly and of the answers is due to globalization. International arbitration is possibly a consequence of the increased in the economic activity at a global scale, since it provides with a sense of security when doing international transactions or investing in other country. All-in-all international arbitration help in eliminating the risks of global transactions.
I will not get into the definition of what globalization is, but we all get the sense of it, as a phenomenon that took place thanks to the increased interconnectedness between different countries seeking to foster their economic leverage. How everything got spinning faster?
My point of view is based on two factors: the first, is the agreement and creation of the WTO, which sought to standardize the different rules for importing and exporting as well as have a trend towards eliminating taxes. The second, is the different regional agreements for free trade, which as well aimed at streamlining the commerce between nations. In all of that, businesspeople got hooked and increased their commercial operations.
And, where does international arbitration fits in all of these events? One of the movements forward in WTO and in international commerce in general, is the standardization of rules, which has been something pursued as an agenda by UNCITRAL as well and not only WTO.
UNCITRAL is the United Nations Commission on International Trade Law, one of its aims is the standardization of rules that will help having a common understanding of rules and procedures for international transactions. That is why UNCITRAL created a model law, as well its rules for arbitration. Along with the famous CISG, the UN convention on international sale of goods.
Along with the above, there are other international institutions that have created their own rules for international arbitration that follow the same international arbitration practice. In that sense, there is a procedural harmonization regarding international arbitration practice, and there seems to be little variation between institutions that administer international arbitration, like the International Chamber of Commerce, the American Arbitration Association, the London Court of International Arbitration, and the Permanent Court of Arbitration rules, just to mention a small quantity of institutions.
But even if there is some standard practice among the people that do international arbitration, there is also some specialization and specialized arbitral institutions; for example, ICSID is an institution created exclusively to deal with breaches of foreign investment law and foreign investment treaties; others are the TAS, which is the tribunal for sports arbitration; and WIPO, which is for disputes on intellectual property matters.
Whenever you are confronted with international arbitration, you will see that the practice of international arbitration is fairly simple but gets complex due to the number of institutions that are created that operate in different regions and the level of specialization depending on the type of business or commercial activity.
Globalization has helped foster commercial activity on a global scale; it is possible to do business globally, and with that comes a level of risk when there is a breach of contract. When that happens, a possible tool for resolving international disputes is international arbitration, which offers a standard set of rules that can be applied in different ways and in different regions of the world, having a beneficial monetary impact when seeking to resolve international disputes.
I hope this overview will help you in understanding a little bit more on international arbitration, if you like this content and would like to continue learning more on the subject please subscribe.
