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International Arbitration Definition
International arbitration is an alternative method of dispute resolution which is conducted in private form in contrast to litigation in courts where the procedure is usually strictly regulated by law. Arbitration is not subject to imperative national procedural rules and parties may agree on a procedure that is less rigorous and suits their needs best. Arbitration rules are generally short and simple and provide parties with wide discretion in procedure management. Another advantage of arbitration is a possibility to choose arbitrators to resolve their disputes, which allows balancing of the parties’ interests and guaranteeing impartiality of the whole process.
In the context of international arbitration parties may submit disputes either to prominent arbitral institutions or to ad hoc arbitral tribunals. There are several arbitral institutions that are known worldwide for their exceptional quality of dispute resolution work, such as the ICC, LCIA, SCC, and SIAC. All of these institutions are experienced in handling Russia-related disputes. The most popular and reliable arbitral institution in Russia for international disputes is the International Commercial Arbitration Court at the Russian Federation Chamber of Commerce (ICAC). The institution has particularly gained popularity among Russian state owned corporations following various sanctions imposed against them during the last several years. It is effectively seen as the only alternative to foreign arbitral institutions. Quite often, foreign companies that want to contract with Russian state corporations are left with no option but the ICAC.
Although international arbitration is outside the scope of state courts’ jurisdiction, arbitral awards are eventually enforced by state courts. In light of the fact that a number of international multi-state treaties exist, the potential for enforcing arbitral awards worldwide is considerably greater than that for court judgments. The principle enforcement convention is the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (known as the New York Convention, 1958). More than 150 countries are party to this Convention (including Russia and China), each of which agreed to enforce arbitral awards made in other contracting states subject only to limited grounds for refusal.
It is evident from business and legal trends that irrespective of some criticism, international arbitration remains exceptionally strong and a widely accepted means of dispute resolution. Rapid globalization means a corresponding growth in the volume of international contracts that often leaves international arbitration as the only option to avoid state courts of a counter-party for a foreign country. This is an inevitable outcome of the growth of multi-national corporations expanding abroad and whose business vitally needs the high-quality forum for resolving disputes.
Despite the existing bias that Russia is not an arbitration friendly jurisdiction, during the last several years the former Supreme Commercial Court of Russia had rendered a number of decisions and issued guidances on the issues relating to international arbitration that has reinforced parties’ confidence in employing arbitration as an effective means of resolving disputes with foreign parties.
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