International Commercial Arbitration in Asia.

ADR - WHY ARBITRATION?

Discontentment with the traditional rigid and adversarial state court system has led to the emergence of other popular methods of alternative dispute resolution ("ADR") procedures, which include inter alia: arbitration, negotiation, mediation, conciliation, dispute review boards and expert determination etc.

International commercial arbitration has enjoyed a long history which predates the existence of organized systems of States' courts. Even though international commercial arbitration as a method of settling disputes has been known and employed by the global commercial community for centuries, there is now an increasing awareness that when parties are desirous of a binding decision -- other than by way of litigation -- and at the same time wish to have a structured, full and fair legal process, arbitration is the preferred and plausible alternative to litigation.

Although arbitration may not always be cheaper than litigation, it is generally speedier, less formal and a greater degree of privacy and confidentiality can be observed and enjoyed by the parties. Unlike litigation in open court, arbitrators are, as a rule, forbidden to disclose any information whatsoever about arbitral proceedings and/or results to a third party. Unwanted intrusion into the dispute resolution process is generally avoided and unnecessary publicity is much less foreseeable.

As barriers to international trade diminish, global commerce has prospered. Concomitant to this has been the rise in disputes between international parties. In an international dispute, it is common that the parties will have their places of business in different countries. Unwillingness by commercial parties to have matters resolved in the foreign court of the other disputing party, with perhaps unfamiliar law, language and culture, adds to arbitration's appeal.

As such, arbitral proceedings are usually held in neutral locales, with expert arbiters agreed and appointed by respective parties applying internationally recognized arbitration rules such as the ICC Rules of Arbitration ("ICC Rules") or the UNCITRAL Model Law on International Commercial Arbitration ("Model Law") as opposed to submission of jurisdiction to national courts of the other disputing party, where aside from the questionable expertise of judges in some less developed countries, there remains the nagging concern about long drawn-out procedural rules which obstruct the speedy resolution of international commercial disputes. Inherent limitations of domestic courts to hear international commercial disputes are also notoriously well known. Complex issues of jurisdiction, problems of foreign state immunity and concerns over the enforcement of any resulting judgment may all complicate and limit the effectiveness of litigation and hence the enforceability of court judgments as opposed to arbitral awards.

It is thus widely acknowledged and indeed appreciated that the strongest advantage of arbitration in cross-border commercial transactions is that arbitral awards are more readily enforceable than court judgments, pursuant to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards ("New York Convention") which provides for the due international recognition and enforcement of foreign arbitral awards in over 120 countries worldwide, subject to very limited defences set out in the New York Convention (discussed towards the end of this paper).