Topic is : Discuss the advantages and disadvantages of parties choosing to use arbitration to resolve a dispute arising under an international sale of goods contract.(3000 words)

INTRODUCTION
With globalization looming large and the expansion of world financial taking place, it has
ecome quite essential for the businesses to establish methods of resolving disputed efficiently,
quickly and constructively. When disputes take place, parties often want to settle down those
disputes informally and privately and this enables them to maintain their relationship even after
such disputes. The business can only be ca
ied out on the good relationships between the
parties. A
itration is designed to deal with such occasions; it can be designed for practical,
quick and efficient resolution.
A
itration is nothing but a voluntary process of resolving dispute where a neutral third party is
engaged to render final binding decision after hearing both the parties. Both the parties get
sufficient opportunity to present their cases. This method of negotiation comes very handy in
international business transaction where foreign legal system is a problem to understand for both
the parties. It has no involvement of court system like in a judicial process. It is conducted
outside the court and an impartial a
itrator is chosen who fit the best according to the criteria of
oth the parties and business.
A
itration can be conducted by either one a
itrator or there can be a panel of three a
itrators
with the format, structure, site and scope of a
itration all decided by the parties and
memorialized in the a
itration clause of their contract. The parties negotiate the a
itration
clause at the time they develop initial contract. A properly structured provision helps in
establishing a framework for expeditious resolution of contract disputes. A
itration gives
greater flexibility to the parties than a court proceeding can give. Parties can decide of having a
defined time period within which they have to respond to the claims, where the a
itration will
take place, whether to involve lawyers in the a
itration or how formal the process will be. Apart
from many advantages a
itration has, there are some disadvantages as well.
DEFINITION OF ARBITRATION
A
itration is a form of contract, or rather a contract and a subsequent contract or undertaking.
The first contract is nothing but the agreement by the two parties to subject disputes to an
a
itration panel under specific rules and in a particular place. The second one is the undertaking
y the panel which is to abide by the rules chosen and to provide a binding award. In the very
first meeting in which both the parties and panel take part, the parties impliedly and expressly
confirm their acceptance of panel and also their role and in effect they tend to confirm a second
undertaking.
The a
itration process is nothing but an agreement to settle down the differences two parties
have, who choose not to prefer the courts, but rather seek the opinions of the experts they have
chosen, and whose decision is deemed final and binding. The experts are supposed to agree to
the mandate and perform their duties. Ideally, the place of the a
itration, the rules of procedure
and the formalities are negotiated appropriately and fairly prior to the dispute in the first
a
itration agreement, including to be bound by the a
itrators’ decision.(1)
In the United Kingdom, the a
itration has a different definition altogether. “The law of private
a
itration is concerned with the relationship between the courts and the relationship between the
courts and the a
itral process.”(2)
The above definition, with its reference to the courts, implicitly recognizes appeals of a
itration
awards on points of law and/or fact and not merely in cases of fraud or improprieties of the
a
itrators or the parties. To add to the lack of finality is the absence of good faith as a strong
principle of English law in respect of the negotiation and performance of contract.
ADVANTAGES OF ARBITRATION
Impartiality of Decision Maker: Any party does not need to be concerned about the facts that a
court will be in another country and may not be neutral and impartial. A
itration allows both the
parties to choose together whom they deem expert and neutral. Diverging decisions would never
take place if a particular standard on a
itrator independence and impartiality provided in law or
ule of a
itration applicable. There are decisions that are diverging may have different a
itral
ules applied. For example, the ICSID Convention says that an a
itrator should be capable of
“independent judgment” while the a
itration rules developed by the United Nations
Commission on International Trade Law (UNCITRAL) also include “impartiality” as part and
parcel of the a
itrator behavior. The uniformity in the a
itration rules is all important so that
a
itrators can reach at the uniform decision rather diverging ones. However, a
itration has
managed to be partial in the decision and this is the reason why it has established a trust and has
ecome popular amongst the business communities. Impartiality helps in promoting fair business
practices across the globe. (3)
Enforceability of A
itral Awards: A
itration awards are final and binding. These awards can
only be challenged under limited circumstances. A
itration is quite popular as dispute resolution
means in business world. It is easier to enforce a
itration in foreign country rather than
judgment of the court. Under the New York Convention 1958, any award which got issued in a
contracting state that can be freely enforced in another contracting state with certain defenses.
(1) Tetley, International Conflict of...