Assess the importance of International arbitration in international Essay

Assess the importance of International arbitration in international business - Essay Example The decisions of these arbitration tribunals are always binding and final, and it is important to note that in international arbitration of disputes, the parties are allowed to modify the terms of the dispute resolution in line with their needs. The question that then rises is how international arbitration works in international businesses. In most international business agreements, there are dispute resolution clauses that state how all disputes within the agreement can be referred to for arbitration and includes such modalities such as the language of the arbitration and the governing law of contract. Other agreements pertaining to international arbitration may also have a mandatory requirement foe a pre-arbitration mediation and whether the international arbitration will be ad hoc or institutional, the mode of selection of the arbitrators, limitations and whether there is the right of appeal from the arbitration award. International arbitration as used in the solution of internati onal commercial disputes is often a viable method but has a few disadvantages in challenging and enforcement of the award owing to the great influence of local courts in the states. The conventions that govern international arbitrations such as the New York Convention amongst others do not help the situation, as they are mostly silent on challenging and enforcement of awards (Kronke 2010, p.255). This causes hurdles in enforcement of awards that parties may refuse due to arguments based on sovereignty and public policy. International Arbitration in International Businesses It is important to note that arbitration is always adjudicative, binding and consensual in nature (Mann and Roberts 2013, p.60). Adjudicative nature of arbitration infers that the arbitrator must not have a conflict of interest in the matter at hand and must not communicate to any party in the dispute independently. The arbitrator must also treat all the parties to the dispute fairly and equally as well as permit the parties to respond to each other’s case judicially and adhere to the agreement between the parties and the scope of their mandate. The arbitration must be binding in the sense that the courts are able to transform an arbitrator’s award into a valid judgment that is executionable unless an adjudicative principle has been breached, there is a public policy ground not to do so or there is a pending appeal. It should also be consensual in that only parties who have agreed to participate in the arbitration are bound by the arbitrator’s award and third parties cannot be affected, while the agreement to arbitrate must show the location, language and the governing law as well as the rules of arbitration. The arbitration agreement can be in a series of clauses in the commercial agreement between the parties concerned even before a dispute arises, or an agreement as to the scope, rules and other matters such as the presentation of documentary or oral evidence. Interna tional arbitration in international businesses is important as they help in the resolution of businesses across borders or businesses situated in multiple jurisdictions. The degree of risk that is posed on businesses operating internationally require that businesses adopt