ISSN: 2582-3655

Author: Ruth Vaiphei[1]

Assistant Professor, ICFAI Law School, Dehradun.


In general parlance the term arbitration is a process to resolve a dispute which has a binding force between the parties involves be it at a national and international level depending on the compulsion of circumstances. Arbitration is a form of alternatives dispute resolution where its existence is embraced either with the law or without law. For instance, even in the absence of a legal mechanism merchant cannot be forbidden from resorting arbitration in order to enforce their bargaining contract. Therefore it is vivid that the pre-requisite in every arbitration process is the involvement of at least two parties without resort to regular process litigation under a setup law rather invokes the adjudication of impartial third parties, and apparently, it is a method of dispute resolution outside the court of law. Also Arbitration can be either mandatory or voluntary, here the words mandatory denotes the existence of prior contract which may be either binding or non-binding voluntarily entered agreed to arbitration for the purpose of any future contingent dispute that will or is likely to occur without necessarily knowing the specific nature, and the nature of non-binding arbitration is similar to mediation decision where the decision is more or like a suggestion to the parties and on the contrary which cannot be imposed to the parties concern. In the primitive period, arbitration was more or like a method to resolve a domestic petty dispute, however, globalization has a great impact even in this method of dispute resolution and now it is often used as a mechanism to resolve a dispute in the context of commercial particularly in an international commercial transaction. Every arbitration requires the consent of the concern parties and it is important to note that the national legal system supervised arbitration with relates to international commercial and is called the “Seat of arbitration”.[2]

It is a never-ending question as to how the arbitration process is addressed by the court separate from the nature of the process itself, though the two have been understood by the best of mind as blended, mingle and joined[3]. When the assert duty to arbitrate is ignored in one side, judicial intervention is invoked in order to compel the continuation of arbitration or to enforce awards against the loser assets by virtue of arbitration. And it is in these instances that another question arises as a concern of the agreed parties involves arbitrating the dispute that whether the proceeding is as expected or thus it meets the end[4]. A way is to pave by arbitration agreement for the settlement of contingent dispute where a judicial decision making is replaced. Nevertheless, states that tend to give the effect of this process will embrace monitors mechanism to ensures the legitimacy of the process and also to vigilant that due process is received by the aggrieved party/parties, lastly to assures that arbitrator respect their jurisdictional limits being conferred by the concern parties seeking for arbitration.


Generally, Arbitration has various functions in varied aspect and the most common function as per various authors is as follow:-

  1. It helps in curbing judicial hostility by ouster judicial jurisdiction. [5]
  2. It enhances the predictability of future contingent which is the pre-requisite of valid arbitration agreement and awards. “Where it’s absent would render practitioners face legal hodgepodge governing court selection and foreign judgment”. [6]
  3. “Lastly it provides intellectual hooks to hang Doctrines useful in addressing the recurring problem. For instance, the principle of ‘severability’ reduces prospects of the arbitration being sabotaged by fraud allegations unrelated to the arbitration clause itself”.[7]

It is important to note that all arbitration laws do not make arbitration easier than what it suppose to be in the case of general contract principles. The fact that oral contracts are often enforceable is not denied; however, it makes sense that some sort of ‘writing’ sometimes augmented by signature is of general requirement in arbitration. To forego with the proverbial of the court is not a small matter and any legal system that tend to enforce the waiver of recourse to judges will try to ensures that both parties or in both side they really meant in waivers of the judges’ intervention. Hence it is doubtless that where there is a valid agreement to arbitrate there is always an existence of arbitration-friendly framework following in reducing wiggle room for escape.

Nods towards the question ‘what is law’ arise when an attempt is made to explain the specific legal framework for arbitration, this implicates the task of understanding not the law of God, neither the law of gravity or the law of averages, but rather the process of authoritative dispute resolution that elaborates a substantive conduct or the way cases get decided through the instrument sponsored by the state. In this context of arbitration, the authority is often supplemented by what is term as ‘soft law’ in guidelines of associations of professional or lore of practisers which represent the expectation of the commercial community. “In cross border disputes, the norms fill gaps in national standards on evidence and ethics, addressing matters such as document production, witness testimony, and conflicts of interest”. [8]

Some argue; norms to count as law, decision-making system would necessarily bear vivid essential features like normative coherence, public accessibility and over time steadiness, as the porous of membrane between the government and non-government are not feel comfortable, however in reply to this context, one might suggest that human artifacts including the notions of law are vary depending on varied context. For a clear understanding, reference is made as to the nature of various games classifying by their varied nature yet still qualified as a game. such as those games that involve the application of robust physical activity to balls namely games like Tennis, squash, football, baseball, and basketball and those involves less physical force and no balls, like chess. Despite their varied nature, there are all the games. Likewise, the contour of arbitration’s legal framework, particularly for international transactions, are not of the same with that of banking regulations, yet they both are regulation for governing a particular field off conduct. [9] Sometimes general principles of arbitration law find places for simple application.


International arbitration is the impact of globalization, as globalization led the world shrinkage and the ability to travel larger distance become possible in a shorter time and in conjunction the capability of communication grows rapidly despite cross border barrier, and world trade has become the norm for an exponentially growing economy without borders. And the ever-increasing international trade results in disputes and there come the needs of international arbitration.  It is the main methods for international dispute resolution that arise commonly in international commercial agreements and out of other international relationship, international arbitration is mainly invoked for resolving international commercial dispute as criminal matters are dealt mainly by the state in accordance with their legal mechanism in a specific area as per penal code, it is obvious that no arbitration can penalize a person while its main concern is to settle a dispute amicably between the parties concern. So is the same in civil matter, since every state has its own civil law within their concern state applicable mainly to the concerned citizen and one civil law of a state is not applicable to others, moreover judgment of a national court is not effective in other countries unless if only accepted or recognized by the local competent authorities. Further, the state is no under obligation to embrace extraterritorial judgment without the treaty, therefore arbitration denotes the expressing will of the parties to be governed by their choice procedural law.

One of the main essential characteristics of international arbitration is the consensual nature where the jurisdiction of arbitration does not arise from any particular state rather from the intention of the person through setting out in the agreed cross border contract in relation to some specific cross border purpose and agreed to invoke arbitration for any future dispute. This denotes the theory of party autonomy which originated from the notion of freedom of contract where right and obligation arising out of the contract or a promise made between the parties. “This autonomy theory is embedded within the international arbitral convention, national arbitration legislation, and institutional arbitrational rules”[10]. The practice has developed the possibility to resolve a dispute of parties from different cultural and legal backgrounds without resorting to the formalities of their respective legal system, also due to its flexibility in designing the procedural by the parties into a contract, it is sometimes known as a hybrid form of dispute resolution.

International arbitration procedure commonly consists of the following:-

  1. An agreement between parties to arbitrates
  2. Selection of arbitrators to arbitrate in accordance with the methods of their selection
  3. Agreement between the parties on the procedure to be followed by the arbitrators
  4. Hearing is done before a single arbitrator followed by a binding award.
  5. The award of arbitrators within its jurisdiction being considered as final and binding
  6. Enforcement of the final and binding awards and limited room for refusal of such enforcement

The resolution of the dispute arises out of the international commercial contracts is widely conducted under auspices of several major international institutions and rule-making bodies. The most significant are:-

  • The International Chamber of commerce (1CC)[11]
  • JAMS international [12]
  • The international center for dispute resolution (ICDR)[13]
  • The international branch of the American Arbitration Association[14]
  • The London Court of International Arbitration (LCIA)[15]
  • The Hongkong International Arbitration center [16]
  • Singapore International Arbitration Centre (SIAC)[17]

Further there exists a body of specialist Arbitrative Dispute Resolution such as the World Intellectual Property Organization (WIPO); it is a neutral body and a non-profit dispute resolution. Where private parties settle their cross border dispute with relates to intellectual property and technology without recourse to a regular court proceeding or in other words words outside court.[18]

United Commission on International Trade (UICITRAL) Arbitration Rules have been adopted by various arbitral Institutions for dealing with international cases. A comprehensive set of procedural is provided by the rules upon which parties agree with the procedure for the conduct of their arbitral that may arise out of their international commercial contract. All aspect of the process with relates to arbitration is covered by the rules also a model for arbitration clause is also provided by the rules further the rules also set out a procedure for the appointment of arbitrators the manner in which the arbitral proceeding will be conducted. At present, there are three different versions of Arbitration Rules[19]:-

  1. The 1976 version;
  2. The 2010 revised version; and
  3. The 2013 version which incorporates the UNICITRAL Rules on transparency for Treaty-Based investor-State Arbitration.

Main Features of International Arbitration

Over the past 50 years, international arbitration has enjoyed the growing popularity in the field of business. It is important to keep in mind that parties do not elect to have their dispute through arbitration randomly but with a number of reasons, and Arthur J. Gonzalez P.C a legal professional, has laid down most common follow[20]:-

  1. The desire to avoid the uncertainties of local practices associated with litigation in national courts
  2. The desire to obtain a quicker, more efficient decision
  3. The relative enforceability of arbitration agreements and arbitral awards as contrasted with forum selection clauses and national court judgments
  4. The commercial expertise of arbitrators
  5. The parties freedom to select and design the arbitral procedures
  6. Confidentiality and other benefits.

He further points out that while drafting an international arbitration agreement a number of essential elements should be included such as;

  1. Definition of the scope of disputes subject to arbitration, (which means for selecting the arbitrators, a choice of the arbitral seat and the adoption of institutional or ad hoc arbitration rules.)
  2. Language for the conduct of the arbitration
  3. Choice of applicable law
  4. Arbitrator qualifications
  5. Interim relief
  6. Costs
  7. Procedural matters and the like.

The Association for International Arbitration

In 2001, Johan Billiet founded The Association for International Arbitration in Paris which is a non-profit Organisation. The association by virtue of its existence there has been an increase in a number of members with an international background of arbitrators and mediators. Its main objective is to resolve international dispute resolution by facilitating arbitration and mediation. In order to promote and enables various organizations and parties involved in the life of association of Alternative Dispute Resolution and arbitration globally, it provides various activities like information and training, etc. Concerning the fast-growing disputes within the international community the Association tries to bore an organization in private international law to meets the dispute so arise. The Association to date works to develop arbitration professional spirits and partnerships in the realm of the international community in the concerned field. Continually the members of the Association were encouraged in order to contribute and participates in pursuit of the goal of the association.  A forum was provided which can be easily accessed by a student especially law student across the world and the latest legal research are made available by publishing their original work by members of the association, also advice and guidance are given by lecturers and professionals, this is all done with an intention to achieve and strives to create an interest in Alternative Dispute resolution amongst Law student across the world specifically in arbitration.


In order to understand the concept of whether international arbitration is an antithesis to state sovereignty, it is important to understand the concept of state sovereignty. The term “Sovereignty derives from a French term sovereign, who is considered as a supreme ruler not accountable to anyone perhaps God”[21]. In this context sovereignty is supreme whose superior authorities have a direct say on any person hence, they can lay an obstacle for a direct judicial remedy on some foreigner investors and trades for uncompensated expropriation. On the other hand, it is because of this reason that foreigner investors suffer harms in the hands of host government who are denoted as sovereign

State sovereignty denotes the concept of that superior authorities lies with the state where all the people and property within the territory are in complete and exclusive control of the same. “State sovereignty also includes the idea that all states are equal as states”.[22] This means that all states have an equal right to control or make the decision with regards to matters within its territory despite the difference in the size of the landscape, population, and financial capabilities.  For instance, a state ranging from Russia to Vatican city all the state have the same power and right, equal function within their own borders, so this makes sense with the idea that one state has no right or power to interfere with other state internal affairs.

In a general perspective, sovereignty bore the idea that demand cannot be made by one state to take particular internal action in the other state. For instance, if a plan of the U.S to set up an amusement park in India is not approved by India this brings the reaction of the U.S limited by the sovereignty of India. India may bring the issue in this respect in various ways however will not have the right to stop maybe by filing a complaint to U.N to survey on the project but it cannot stop the U.S from initiating their project or ask them to stop as well cannot expect them from obeying their order.

While dealing with the concept of state sovereignty an understanding always lies about the fact that no state can order or tell another state as to the way or how to control their internal affairs. Sovereignty grants power or limits that power, which means that it gives complete and exclusive control over their own territory and restricts them from interfering in the internal affairs of other states or restricts the influence of others within its own state. For examples India cannot restrict the U.S from ultimate decision with regards to their amusement project, hence sovereignty limits the power of India in interfering with the decision making of the U.S and U.S from intervening to the territory of India.

However, Globalisation has changed the view of sovereignty. The concept of sovereignty as complete and exclusive control of the property and person within their territory has no longer become exclusive with the ongoing process of globalization. The population are now not considered as the exclusive population of one state and are taken into account to form a world community at the interest of the world community, in other word treatment of citizen one state are no longer view as the exclusive concern of one state. For instance, International Human Rights Law developed the idea to the entire global community as responsible for the right of every individual. International treaties are also the outcome of globalization that sometimes binds or imposes on states to gives certain rights to their own citizens’ that are at the global level by virtue of the agreement. Sometimes there arise situations where one country monitors the entire human rights treaties against another state for the treatment of the offending state’s own citizens.


Globalization has introduced the idea of arbitration at the international level, as it influences the growth of multinational corporations that are operating globally as well as within the locally domestic market apparently resulted in ‘Statelessness’ corporation that moves around the world without reference to any particular national borders. Transnational international commercial arbitration saw seeds as a means of leading alternative to litigation settling international commercial business disputes due to increasingly complex in the activities and practices of business and its strategies. The community of International business has express needs for the growth and development of international commercial arbitration in the globalized world.

Traditionally main reasons for the increasing needs and use of arbitration in globalize world includes:-

  • The speedy resolution of a dispute relating to commercial;
  • Due to its minimal costs unlike other forms of dispute litigation;
  • The process is of privacy in nature;
  • Arbitral forum perceived neutrality; and
  • Enforcement of its award is relative ease.

Although the concept that arbitration as compared to litigation is quicker as well more cost-effective may not be invariably true, however in current globalize world the practice standard is that in every contracts that tend to govern international commercial transaction such as agreements for licensing and for transfer of technology, industrial and joint ventures manufacturing, large scale construction and engineering infrastructure projects, and between corporation alliances strategic to develop an innovative technologies or distribution of goods and services providing in third countries, must include an arbitration clause

In today’s world, when states or international companies are involving in commercial negotiations across the borders, it is very obvious that issues may arise between such states or international companies that instead of indulging in legal procedures it is highly advisable to enter into the Arbitration. It not only includes the commercial agreements but also covers the international relationships shared by different states.  As any matter can be completely resolved in a very affordable and easy available manner, i.e., through Arbitration. Arbitration is a method where two parties can decide their own rules and appoint arbitrators according to their needs –the arbitral award is therefore very accurate and undeniable, as parties have made the choice themselves.

Further needs of international arbitration in globalize world set its roots due to the assertion of the schemes of jurisdiction – where many a time national court base their jurisdiction on different principles of law or different sources that are quite conflicts, and the concept of international arbitration portrait the idea that there is an involvement of different parties from different countries who are governed by totally different legal mechanism.  And the assertion scheme of jurisdiction renders the Plaintiff to choose the application of jurisdictions between a number of the same. This process is referred to as ‘forum shopping’ mostly based on considerations of tactical and relevant advantages from certain jurisdiction which is anticipated bias for the plaintiffs. However the loopholes of this scheme which pave a way for invoking international arbitration by the concern parties is that when exercise of jurisdiction over the same dispute is claimed by the national courts of several countries, simultaneously it may result in parallel litigation in more than one courts in different countries considerable causing uncertainty and delays as well as conflicting judgment on the same matters. Further, in several courts, the parties may be forced to defence themselves at the followed to deal with competing for anti-suit injunctions. Another related issue is that judgments of national courts are not enforceable outside the state which rendered it’s effective enforceable only if recognized by a competent authority of the concern local authority. Hence the needs of international arbitration become higher and higher.

What happens when a big state indulges into a commercial agreement with a small state and such a small state becomes unable to perform its part? Then there will be two remedies –first, to ask for the International Court of Justice to decide the matter –which is a very long process and it also involves the risk of ruining the relationship between the two States. Second, is to go for arbitration procedure –which will require parties’ own rules and the arbitrator, who is mutually appointed by the parties themselves and it will also not ruin the relationship between the two. It is a common practice between big commercial international houses and states to resolve their matter through Arbitration.

The ultimate result for the needs of international arbitration is an antithesis to state sovereignty;

Now, speaking about the antithesis to state sovereignty then we can undoubtedly say that a state holds a vested interest in its state because it exercises supreme control over it. This confers one point that –as the state is supreme over its territory than the State is the supreme legislator in its territory than it will be no wrong to say that a State is its own legislator. And here the problem lies. When State is sovereign it controls the matter related to law but when it comes to arbitration rules are decided by the parties and not by the sovereign. But it will be very important to note –“that arbitration is not an independent of national jurisdiction”. Rules of arbitration tribunals are decided by the state as to how they will carry their business.

Thus, arbitration agreement by allowing parties to arbitrate a matter behind the closed doors without any hue and cry has demeaned the thesis of state sovereignty as a whole. As the superiority of the state has been challenged by resisting State interference in resolving the disputes related to private parties. By enabling parties to choose their arbitrators and power to design their rules for arbitration has minimized the role of the state in any matter which holds an international dispute, hence the state has lost its superiority.

The question, arises, how far the state has tolerated international arbitration as an exclusion of its Court jurisdiction?

As already discuss the concept of state sovereignty states are completely and extremely interested or have exclusive control over an interest that occurs within their territory. This rooted an idea that being vested with the supreme authority would mean all the power to arbitrate a dispute relating to its citizen and foreigners will lie in him; however this traditional ideology has been diluted by the emergence of globalization where the current trend practically followed view is that without being a practitioners it would not cover the concept of state sovereignty, that is why any attempt to brings an exception to its jurisdiction in their court cannot be cannot be stand or tolerate by the states. International arbitration is a means to escape from the authority of the state.

In the old traditional method of contract, the strict legal theory is that jurisdiction of the national court cannot be excluded in any private agreement which evolves the idea that states have the scope of intervening in private issue, however in the light of the fact that with the needs of international arbitrations as an impact of globalization it is no more possible to stick with the old legal theory.

Therefore we conclude it by saying that Arbitration is the best possible remedies available in international commercial transactions around the world as it provides methods of amicable dispute resolution and also avoids the threat of partiality. Thus, we support the needs of Arbitration in the globalized world which automatically results in the antithesis of state sovereignty.  

 “Discourage litigation. Persuade neighbors to compromise whenever you. Point out to them how the nominal winner is often the real loser in fees, expenses, and waste of time. As a peacemaker, the lawyer has a superior opportunity of becoming a good (person)”  

Abraham Lincoln

[1] Assistant Professor, ICFAI UNIVERSITY, DEHRADUN, [email protected]

[2] Robert Hunter  ‘NATIONAL ARBITRATION AND INVESTMENT LAW’,  available at (visited on 17.03.2016)

[3]  Wesley A. Sturges, ‘ARBITRATION –WHAT IS IT?’, Yale Law School (1st January, 1960). Available at: (accessed on 1st March 2019)

[4] Alan Scott Rau, ‘ARBITRAL JURISDICTION AND THE DIMENSIONS OF CONSENT’, Arbitration International  (2008)

[5] Czarnikow v Roth, Schmidt & Co [1922] 2 KB 478, 488.

[6] AT&T Mobility LLC v Concepcion, 131 S Ct 1740, 1753 (2011)

[7] Kahn Lucas Lancaster v. Lark Int’l Ltd, 186 F 3d 210 (2d Cir 1999) and Sphere Drake Ins v. Marine Towing, 16 F 3d 666, 669 (5th Cir 1994)

[8] Applied Industrial Materials Corp (AIMCOR) v. Ovalar Makine Ticaret Ve Sanayi,, 492 F 3d 132 (2d Cir 2007).



[11] Available at; (access on 18.03.2016)

[12] Available at (last access on 19.03.2016)

[13] Available at ; (access on 18.03.2016.)

[14] (access on 18.03.016)

[15] Available at; (access on 18.03.2016)

[16] Available at; (access on 18.3.2016)

[17] Available at; (access on 18.03.016)

[18] WIPO ADR available at; (visited on 20.03.2018)

[19] UNICITRAL Arbitration rules, available at (access on 19.03.2019)

[20] Available at (last visited on 19.03.2019 )


[22] Sunny Levin ‘THE ISSUE OF SOVEREIGNTY’, Available at, (access on 20.03.2016)

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