Arbitration

Group Visual Arbitration quadratisch

Arbitration proceedings are a dispute resolution tool often used to resolve legal disputes at both a national and international level. Particularly in an international context, it is often preferable for companies to conduct a dispute before an international arbitral tribunal rather than before the state courts in the contracting partner’s country. Enforcing arbitral awards at an international level is also generally more predictable than enforcing state judgments.

We recommend that you obtain individual advice on whether arbitration or a different dispute resolution instrument is the best choice for your specific case. The pros and cons should be individually weighed, as a wide range of factors are at play. Important factors to consider include the effects of a legal dispute on the business relationship, whether it is important to keep the proceedings confidential, and the subsequent enforceability of an arbitral award as compared to a judgment by a state court. When drawing up an arbitration agreement, it is necessary to carefully define whether a dispute should be carried out ad hoc or by involving an arbitration institution. Arbitration institutions are helpful when implementing the arbitral proceedings and provide rules of arbitration which set out the basic procedural rules.

Arbitration is a popular mechanism for resolving conflicts due to the high degree of flexibility when structuring the proceedings. The worldwide enforceability of arbitral awards, the parties’ freedom to independently choose skilled arbitrators and the place of arbitration are key aspects. Yet, arbitration proceedings may also have disadvantages. As a rule, there is no appeal instance available. Instead, a review of the arbitral award by the state courts is restricted to a limited list of grounds to set aside, such as a breach of the right to a fair hearing.

Aspects of arbitration proceedings which attract criticism include their length and the costs involved. It is vital to conduct the proceedings stringently and, when selecting arbitrators, to bear in mind the arbitrators’ efficiency and availability. The costs of arbitration institutions also vary greatly and should be analysed beforehand.