International Commercial Litigation and Conflict of Laws
The resolution of disputes arising from private international commercial transactions may be conducted through international commercial mediation, litigation or arbitration. Some inherent difficulties of international litigation include the reluctance to litigate in a foreign court due to unfamiliarity or potential bias; and issues of enforcement of a foreign judgment. To overcome this, international commercial arbitration (‘arbitration’) has become a widespread means of solving international commercial disputes.
Like mediation, arbitration is a private dispute resolution process pursuant to an agreement between parties. The arbitrator or arbitral panel derives their authority and jurisdiction from the commercial agreement; and their decision is prima facie binding. Arbitration is divided into institutional and ad hoc arbitration.
Institutional Arbitration is conducted through an organisation, such as the ICC. The organisation governs the arbitral process through a set of rules and administrative structures. Resorting to the institution is typically determined by terms of the commercial contract between parties.
Ad-hoc Arbitration occurs where parties have not specifically made reference to arbitral institution in the contract but agree to submit their dispute to arbitration. Parties can agree to arbitrate according to a statute governing arbitration in the State of one contracting party; or according to an independent set of arbitral rules, such as the UNCITRAL Model Law on International Commercial Arbitration. These rules provide coverage of international commercial arbitration and parties do not need to settle on the arbitration rules.
Recognition and enforcement of an international commercial arbitral award will be according to the laws of State seeking enforcement . Where the State has adopted the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, enforcement will be according to the terms of the Convention. The Convention provides a simple, uniform and effective means of enforcing arbitral awards and processes. In practice, the Convention is the chief means of recognition and enforcement of arbitral awards globally.
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