Arbitration can be a meaningful alternative to litigation and is possible for both national and international legal disputes.
In many cases, arbitration is suitable for resolving a legal dispute. Both on a national level and in cross-border legal conflicts, arbitration offers advantages over court proceedings. Arbitration is generally faster and more cost-effective. Moreover, arbitration awards, especially internationally, can often be enforced more easily than judgments from national courts, according to attorney Michael Rainer, MTR Legal.
Whether a court or arbitration proceeding is the better option to resolve a conflict depends on a number of factors that need to be considered. Arbitration can be conducted more quickly in most countries and typically incurs fewer costs than litigating the dispute in court. Additionally, arbitration proceedings are not open to the public, which can be a decisive advantage in protecting the reputation of the involved companies. Especially in legal disputes between business partners, arbitration can be an appealing option, as it places less strain on the business relationship.
The arbitrators in arbitration are independent and selected by the involved parties. They are experts well-versed in the subject matter. Thanks to the New York Convention of 1959, arbitration awards can be enforced in most countries, with nearly 170 nations having signed the convention. Thus, arbitration awards can be executed virtually worldwide. An arbitral award is often easier to enforce than national court judgments. Furthermore, international arbitration can help avoid any ‘home advantage’ for either party.
Where there is light, there is always shadow. A disadvantage of arbitration is that there are very limited opportunities to challenge an arbitration award. There is typically no appellate instance and state courts have very limited scope. It may be possible to challenge an arbitration award, for example, if the right to be heard was violated.
Therefore, it is important to weigh the advantages and disadvantages beforehand and then decide whether to settle the conflict through arbitration or a state court.
