• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month
Page
  1. 1
    1
  2. 2
    2
  3. 3
    3
  4. 4
    4
  5. 5
    5
  6. 6
    6
  7. 7
    7
  8. 8
    8
  9. 9
    9
  10. 10
    10
  11. 11
    11
  12. 12
    12
  13. 13
    13

Critically discuss the role and importance of international commercial arbitration as an alternative dispute settlement mechanism in international trade today.

Extracts from this document...

Introduction

Question 11. Critically discuss the role and importance of international commercial arbitration as an alternative dispute settlement mechanism in international trade today. Introduction: In recent years, alternative dispute resolution, or ADR, has experienced an increasing popularity, no doubt as a result of dissatisfaction with the high costs and devastating effects of litigation. ADR includes such diverse procedures, such as non-binding mediation and the summary jury trial. But the most common form of ADR is arbitration. (WWW.BUSINESSWEEKONLINE.COM) Commercial arbitration has been going through an incredible growth over the past decades. (WWW.FINDLAW.COM) The development of international and domestic business operations in the last century relates to the increasing requirement of arbitration as a way of dispute settlement. Consequently, it has become a prominent feature of both domestic and international business transactions. As business globalizes, successful presentation or defense of international arbitration claims will become increasingly critical to company's litigation strategy. International arbitration is a good option if a party is not familiar with the court system of the country in which the dispute may be heard. Even if A party is successful in obtaining a judgment in a foreign country through litigation, there may be still be uncertainty about its enforcement. Arbitration awards, however, are generally enforced in most countries of the world. Most courts throughout the world also enforce arbitration agreements between companies doing business internationally. Trebilcock & Howse (2000), Page 51. On the other hand, certain disadvantages might have negative impact on the result for adopting arbitration. ...read more.

Middle

Not only can that have a prejudicial effect; it almost certainly will prolong the hearings. * Discovery In complex cases, discovery can be very important. Each side seeks to learn about the other party's case through the use of interrogatories, document demands and depositions. However, there is no such discovery is available in arbitration. (Mackie (1997), Page 65) In more complex cases, arbitrators typically allow some limited discovery, such as document exchange and perhaps one or two depositions. But there can be no assurance such discovery rights will be granted. Without such discovery, the parties enter the arbitration with very limited knowledge as to what can be expected. The advantage is that the very high costs, which are always incurred in discovery, may be avoided. * Costs Litigation costs in arbitration are substantially less than in court. Because arbitration is less formal than litigation, the hearing is less formal than litigation; the hearing is usually shorter than a court case would be. (Mackie (1997), Page 79) Also, an arbitration hearing can be scheduled much sooner than a court date. The saving in time can be reflected in lower overall costs to the parties. However, in some situation, arbitration can be very expensive. The parties compensate the arbitrators, and their fees can be very substantial, especially in a protracted case. In addition, the organisation administering the arbitration, such as the AAA, has a filing fee typically predicated on the amount in dispute, and that fee can be very substantial as well. ...read more.

Conclusion

(Mackie (1997), Page 231) Parties in litigation in the court system are entitled to select for a fee, legal counsel representation. In most cases litigation is a more formal method of dispute resolution. The court system is strictly governed by the rules of evidence and procedure under the laws. An unfavorable award of the court may be appealed to a higher court. (Mackie (1997), Page 240) Nonetheless, it is fair to say that arbitration may still in many instances be more cost-effective and predictable than litigating in a foreign country. Conclusion: In the event of a dispute arising, there are a variety of methods available for resolving it. The simplest and often the most beneficial is for the parties themselves to resolve the dispute by direct negotiation. Failing settlement, the parties may resort to litigation, a formal arbitration or one of a number of developing alternative forms of dispute resolution. In general, businesses tend to prefer to avoid litigation of possible. Litigation is slow and costly; moreover it may entail bad publicity and may damage the trading relationship between the parties to a dispute. The choice of arbitration permits parties not only to make the proceedings and the outcome more predictable, but also to assert control over release of information about the proceedings and over the continuing commercial relationships among the parties. Unlike court proceedings, in most countries, arbitration proceedings are confidential. Other advantages include less cost, less formality, time saving and enforceable awards. On the other hand, certain disadvantages exist in the arbitration procedure. Therefore, both the advantages and disadvantages must be fully appreciated, for the decision to elect arbitration and other court system is irreversible. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level UK, European & Global Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level UK, European & Global Economics essays

  1. Marked by a teacher

    International Business Strategy - Case Study on Unilever

    4 star(s)

    It has contributed a lot towards economies of countries it operates in. For example, in South Africa, direct jobs attributed to Unilever are 3000 and indirect ones were 100,000 (Steib 2008: 10). It is also clear that 0.8% of employment opportunities, and 0.9% of GDP in South Africa is attributable to Unilever.

  2. Marked by a teacher

    Assess the importance of international trade to the UK economy

    4 star(s)

    adopt a laissez-faire approach, which suggested that in a free market, there should be no state regulation, and this will result in economic welfare maximisation. This view was in relation to international and domestic economies. Smith put forward the idea of Absolute advantage, where a country should specialise in the

  1. Why has GDP growth been so slow in Somalia?

    economic policies to stabilise the country's economy and raise standards of living. Another problem is that the tax authority may fail to detect the income earned through the black market. The official tax rates may have to increase as a result, to compensate for the losses.

  2. HOW DID JAPAN ACHIEVE INTERNATIONAL COMPETITIVENESS IN TEXTILE INDUSTRY? EXPLAIN THE ROLE OF THE ...

    Larger Japanese mills had research staffs, managers of the Japanese cotton spinning companies sent their engineers abroad to seek the latest developments, so that the company can benefit from their knowledge and experience gained from advanced countries. * Labour force Labour force is one of the most important forces behind the successes of the Japanese textile.

  1. International trade - In this case I choose the country Canada. When doing a ...

    Gemos experienced team of dividers and packers makes sure that the flowers, that the customer ordered, gets the best attention during internal handling and packed suitable for the way of transport. The quality control is important to every business. Gemos Flower has a triple quality control.

  2. international trade

    The company stared as a small aptheke in Deutschland in 1839. After a couple of years they had a business in Italy in 1925 and in 1973 they had a trade with Malaysia . In 1979 a foundation of B Braun in America and so on.

  1. Consider the Extent to Which Economic Theories Effectively Explain the Changing Patterns of Trade ...

    In particular, in combination with changing consumer preferences as incomes rise, advanced technology, and trade agreements have played large roles in allowing access to markets, breaking through old constraints of climate, location, and growing season to encompass what is truly a global market.

  2. International Diversification and the Home Bias Puzzle

    Longin and Solnik (1995) find that correlation is not related to market volatility but to the market trend. They find that correlations between markets tend to increase in bear markets but not in bull markets. Currency risk is also seen by some as a barrier to international diversification.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work