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The Definition of Arbitration Episode 1
Arbitration can be defined as an alternative method to national courts in order to settle disputes, in which parties devolve the dispute to a third neutral person or a panel whom called arbitrator(s) designated by parties. The decision of the arbitrator, the award, is final and binding upon parties.
These are some of the arbitration’s characteristic:
- Lex applicable to the proceedings (lex arbitri) depends on the country chosen by the parties as to the seat of arbitration.
- The arbitrator(s) must be impartial and independent during the whole arbitration proceedings.
- The arbitrators’ power originated from the arbitration agreement. The latter defines the limit of that power, including the issues arbitrators are allowed to decide.
- Contrary to judges in court proceedings that can only decide according to the law, arbitrators are allowed to decide using also rules of law. This possibility makes arbitration proceedings more flexible for every need of parties.
- Arbitration allows parties to settle the dispute during the proceeding. Upon parties’ request, their settlement can be incorporated in an award (consent award). In this way, parties can circulate their agreement under the New York Convention with all the related benefits.
- Arbitration lacks enforcement power. Once the award has rendered, the parties need the help of a court to recognize and enforce it.
