What is International Arbitration

Definition of International Arbitration

An International Arbitration is a form of Alternative Dispute Resolution (ADR) where one or more person(s) are appointed to arbitrate upon a dispute that takes place which is not specfic to one jurisdictional Country. Here the Arbitration subject and dispute reaches beyond the borders of a single jurisdiction.

Arbitration is Private adjudiciation

Procedurally the International Arbitration is somewhat similar to domestic court but it does not take place in courtrooms instead it is held before private adjudicators known as the Arbitrators. This form of Arbitration is bu its very nature is neutral, consensual, binding, private, and enforceable means of international dispute resolution which is quicker and easier than the court proceedings..

Legal Definition of Arbitration under Arbitration and Conciliation Act,1996 

The most significant contribution of Arbitration and Conciliation Act,1996 is the categorical definition of international commercial arbitration. Clause(f) of sub-section (1) of section 2 of the 1996 Act defines international commercial arbitration as - Arbitration relating to disputes arising out of legal relationships, whether contractual or not, considered as commercial under the law in force in India and where at least one of the parties is:

    a) An individual who is a national of, or habitually resident in or any country other than India
    b) A corporate body which is incorporated in any country other than India
    c) A company or an association or a body of individuals whose central management and control is exercised in any country other than India
    d) The government of foreign country.

Procedure followed - Evidently international arbitration can take place in India in accordance with the same procedure as domestic arbitration. Arbitration becomes ‘international’ when at least one of the parties involved is resident or domiciled outside India or the subject matter of the dispute is abroad.

Law applicable - In International arbitration the law applicable may be the Indian Law or a foreign law, depending on the terms of contract in this regard and the rules of conflict of laws.

Language barriers - International arbitration provides a way of dispute resolution for the parties of different culture, languages, legal rules under one common procedure which is a binding on the disputed parties. Here no legal formalities such as courtrooms are conducted so, the people are getting easy access to justice without any form of lengthy procedures.

Custom procedure - International Arbitration can have a healthy amalgamation of Civil Procedures and Common Procedural laws to adjuducate the disputes arising between the parties to the contract and provide them with fair decisions in the form of Arbitral Awards

Scope of International Arbitration 

Any arbitration matter between parties to the arbitration agreement shall be called an international commercial arbitration if:
(1) The matter relates to a commercial dispute between Two or more Parties;
(2) Such fiscal disputes have arisen out of binding legal relationship;
(3) Such legal relationships may or may not be contractual in nature;
(4) The disputes should be those which are considered commercial under the law in force in India ie Commercial Courts Act, 2015 
5) In Internation Commercial Arbitration at least one of the parties is;
    (i) habitually resident overseas, whether a national of that country or not; or
    (ii) A body corporate which is incorporated abroad as per Law;
    (iii) A company or an association or a body of person whose central management and control is exercised abroad; or
    (iv) The government of a foreign country.

How to identify an International Dispute

There are three ways of establishing the international character of arbitration. An arbitration may be international because;
     (a) Its subject matter or its procedure or its organization is international or
     (b) The parties involved are connected with different jurisdiction; or
     (c) There is combination of both

a) The objective criterion: The objective criterion focuses on the subject matter of the dispute and the international or national character of the underlying transaction. Hence the international commercial interest or the cross border element of the underlying contract, or the fact that the dispute is referred to a genuinely international arbitration institution. 

b) The subjective criterion: According to the subjective criterion the focus is on the different nationality or domicile or place of business of the parties to the arbitration agreement. It follows that parties, individuals or companies should come from different jurisdiction. 

c) The Modern Combined Criterion: A third approach combines both the subjective and objective criteria.