International arbitration has many benefits for banking and finance disputes, and parties to those disputes are increasingly recognizing those advantages. While banks and financial institutions have traditionally used courts and other judicial forums to resolve disputes, including international disputes, increasing numbers of cases are being litigated and resolved through international arbitration.
International arbitration differs from court-based litigation in several respects. Parties in international arbitration are able to choose their arbitrators, or at least be involved in the selection, avoiding potentially biased judges in a foreign court. International arbitrations can be held anywhere in the world, typically in a neutral forum chosen by the parties, the administrator of the arbitration, or the arbitrators themselves. Parties can therefore avoid litigating against a party with local influence.
Parties themselves can tailor the arbitration procedure to their needs. Parties can do this at the outset, by spelling out certain procedures in their contractual dispute resolution clauses, or in conjunction with the administrator or arbitrators once the dispute has arisen. Parties can agree to restrict submissions, discovery, or even the time allotted for hearings, controlling costs and reducing the time necessary to reach a decision.
Perhaps most crucially, international arbitration decisions are enforceable virtually anywhere in the world. Over 150 countries are signatories to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, commonly known as the New York Convention. An international arbitration award can therefore be enforced against another party’s assets in any of those countries. Enforcement of a foreign court decision is far less certain in many countries. Further, because arbitration awards are subject to challenge only on very limited and rarely successful grounds, enforcement often does not involve a lengthy appeal process.
Given the advantages of international arbitration, it’s unsurprising that increasing numbers of parties are choosing arbitration over traditional judicial proceedings. The International Centre for Dispute Resolution, the American Arbitration Association’s international organization, reported that business-to-business financial services cases increased 78 percent in 2018. http://go.adr.org/2018-b2b-statistics. Given the benefits of international arbitration, it is reasonable to expect the number of those cases to continue to grow for 2019 and beyond.
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