When private parties engage in cross border trade, often called "international business transactions", the legal issues that arise fall within the larger concept of private international law. As international business transactions have increased, so have related disputes and the need for International dispute resolution.
For reasons discussed below, arbitration is a favored dispute resolution option particularly in the context of international commercial transactions. International commercial arbitration is a legal specialty that requires practitioners to be familiar with different legal traditions and sources of law. Many sources of law may be brought to bear in the arbitration of an international business dispute per Law Professor Stacie Strong.
Prof. Strong lists eight categories of legal authority in international commercial arbitration in her text, Research and Practice in International Commercial Arbitration: sources and strategies (2009) at 12. Those categories are as follows:
Some of these sources are listed on the Sources of Law chart and are discussed under other tabs of this Libguide. Others, like Arbitral Rules and Arbitral Awards, are discussed under this tab. A sampling of arbitral bodies is provided below.
Arbitration has always been a popular means of settling international disputes due to the uncertainties of litigation in the court system of another country. In addition, many countries have now adopted the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, June 10, 1958, 330 U.N.T.S. 3; 21 U.S.T. 2517 (New York Convention).
Per the UNCITRAL website, the New York Convention is widely recognized as a foundational instrument of international arbitration and requires courts of contracting States to give effect to an agreement to arbitrate and also to recognize and enforce awards made in other States, subject to limited exceptions. By limiting the grounds upon which arbitral awards can be attacked, the New York Convention has made international arbitration a preferred mode for the settlement of international disputes.
By adopting arbitration as their dispute resolution mechanism, parties opt for a kind of private court. They can specify the forum and governing law that will apply to any arbitration. Parties may elect an existing institution to handle disputes. A number of arbitral bodies exist to provide this service.
States, as well as private parties, may resort to arbitration. Certain arbitral bodies specialize in state arbitration i.e. Permanent Court of Arbitration. Increasingly, however, arbitrations may involve various combinations of state and private parties.
There are two types of arbitration, ad hoc and institutional. In ad hoc arbitration, parties organize and plan their own arbitration, including the selection of arbitrators, designation of rules and applicable law, and arbritators' powers. The arbitration agreement must specify all aspects of the arbitration.
When parties select institutional arbitration, an arbitral institution provides the rules of procedure for the arbitration and performs supervisory and administrative functions such as keeping the proceedings on a timetable. Parties can select an international institution such as the International Court of Arbitration (ICC) or a national institution such as the American Arbitration Association (AAA). See Jean M. Wenger, Update to International Commercial Arbitration: Locating the Resources (May 24, 2004).
Note that arbitration of international investment disputes is a subset of international commercial arbitration. Foreign investment is generally governed by bilateral investment treaties (BITs), which are discussed further here. The agreements provide for dispute resolution between states parties and between investors and states usually by arbitration by the International Center for Settlement of Investment Disputes (ICSID).
ICSID is one of five closely associated organizations which constitute the World Bank Group. As stated at its website, ICSID is an autonomous international institution established under the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the ICSID or the Washington Convention) with over one hundred and forty member States. The Convention sets forth ICSID's mandate, organization and core functions. The primary purpose of ICSID is to provide facilities for conciliation and arbitration of international investment disputes.
ICSID decision citations, but not always full text, are available through the ICSID website.
The International Chamber of Commerce was founded in 1919 to serve world business by promoting trade and investment, open markets for goods and services, and enabling the free flow of capital. The International Secretariat was established in Paris. The ICC International Court of Arbitration was established 1923.
Through arbitration under the rules of its International Court of Arbitration, the ICC has an important standard and rule setting role. In addition, the ICC's Uniform Customs and Practice for Documentary Credits (UCP 500) are the rules that banks apply to finance world trade. ICC Incoterms are standard international trade definitions used in international business contracts. The ICC also provides model contracts which are of particular use to small businesses.
The ICC acts as a representative on behalf of business before governments and IGOs. The ICC has consultative status with the UN and its specialized agencies and thereby provides business input to the United Nations, the World Trade Organization, and many other intergovernmental bodies, both international and regional.
The ICC Dispute Resolution Library provides access to arbitral awards which are published in its ICC Bulletin. A subscription is required to access full text. Some ICC arbitral awards (1975 - 2004) are available via Westlaw.
UNCITRAL (the UN Commission on International Trade Law) was created by the U.N. General Assembly in 1966 to promote trade. It is also charged with furthering the progressive harmonization and unification of the law of international trade. UNCITRAL is the core legal body of the United Nations system in the field of international trade law. UNCITRAL drafted the U.N. Convention on Contracts for the International Sale of Goods (CISG), which was adopted in 1980.
Although the Convention on Recognition and Enforcement of Foreign Arbitral Awards (1958) was prepared by the United Nations and adopted by diplomatic conference prior to the establishment of UNCITRAL, promotion of the New York Convention is an integral part of the UNCITRAL's work. While UNCITRAL itself may not act as arbitrator, its Arbitration Rules (1976) are widely used in commercial arbitrations
The Permanent Court of Arbitration was established by the 1899 Convention for the Pacific Settlement of International Disputes. It is an IGO which provides a variety of dispute resolution services to the international community. The PCA now provides services for the resolution of disputes involving various combinations of states, state entities, intergovernmental organizations, and private parties. It is based in The Hague, Netherlands.