Effects Of International Commercial Arbitration

The global commercial community in the last fifty years, has widely accepted arbitration as a widely accepted mechanism for resolving international commercial disputes between the parties. Arbitration played a much-needed and timely role in stabilizing the vessel of international commerce in the initial days. From the perspective of its incorporation into domestic legal regimes, international commercial arbitration is a great success story. Although International Conventions and legislations together with the National laws give power to the domestic courts to refuse arbitral awards in certain circumstances, but they rarely do it. States on large scale have recognized and enforced arbitral awards. Given the much celebrated success of international

International Commercial arbitration and International courts have been argued to have distinguished effects on the international commercial community at large through their rulings. An international judgment can have an enforcement effect. The national court can force a party to follow the decision in national litigation. Second, the judgment can have a precedential effect. A domestic court may decide that an international judgment not only binds the parties to a particular dispute, but also to parties that have relatively similar dispute. Lastly, the judgment can have a persuasive effect. The domestic court can decide that, it can adopt certain convincing arguments as its own, although they are not binding. While most of these effects hold true for international courts, only the first of the three effects is significant with reference to international commercial

In the absence of an agreed approach to the same, the rights so concluded may remain territorially bound, thus may raise transnational disputes. Secondly, the importance of harmonizing dispute resolution practices and processes. Thirdly, the importance of a common ethical framework to govern practitioners within a dispute resolution system. Fourthly, the importance of harmonizing substantive commercial laws. The existence of different legal systems and commercial laws increases the transaction costs of cross-border business because such differences create friction in transnational commerce. Lastly, a successful system will have to deal with, rather than ignore, the twin tidal forces of state sovereignty and globalization. The legitimacy of international commercial arbitration stemmed from the fact that it was chosen by the international commercial community. However, despite its roots in the choices made by private actors, it became the pre-eminent mode of cross-border civil dispute resolution due to institutional structures such as the New York Convention and the Model