I. BASIC FEATURES OF INTERNATIONAL ARBITRATION

A. Objectives and Conditions of International as Distinct from Domestic Arbitration
It is appropriate to state briefly at the outset the objectives and conditions of international commercial arbitration, particularly those that do not coincide with domestic arbitration or that have a special dimension in the international sphere.

1. Final Resolution of International Business Disputes. In a recent speech, the renowned Indian lawyer, Fali S. Nariman, appropriately stated:

Though litigation is compulsory and arbitration is consensual, both are judicial processes of an adversarial character. That is why arbitration has always been regarded as quasi-judicial.1

The ultimate objective of international arbitration is the same as that of litigation, i.e., to create a process for the final resolution of international business disputes. Arbitration is consensual in the sense that it cannot be imposed unless a party has agreed to it either by contract in advance or once a dispute arises. All other elements of arbitration, however, are as compulsory as those of the ordinary judicial process.

2. Reasons for Prescribing Arbitration in Lieu of Litigation. In most countries, there is a clear choice between domestic arbitration and proceedings before courts in the relevant jurisdiction, but in the international sphere the courts of at least two nations compete for supremacy and most often have overlapping jurisdiction. Lack of trust in the courts of a foreign state, linguistic diversity, and the absence of effective enforcement procedures applicable to “foreign” judgments have combined in motivating businesspeople to opt for arbitration to resolve their transnational disputes. Three factors account for the appeal of arbitration: first, the international arbitral tribunal is frequently composed of arbitrators of various nationalities; second, a single language familiar to both parties is employed in the arbitral proceedings; and third, awards are enforceable virtually everywhere under the New York Convention and other treaties.

Moreover, the basic point of departure in any discussion of arbitration must be its relative advantages or disadvantages in comparison with the sole available alternative — litigation before national courts — and that the latter will always be alien to at least one party.