Meaning
Adjudication of contractual conflicts by a private tribunal located in a neutral jurisdiction allows international partners to bypass domestic court systems. This method relies on the consent of all parties involved.
Seat Selection
The geographic location where the proceedings are legally based determines the procedural law that governs the dispute. In foreign arbitration, choosing a seat like London or Singapore provides access to a stable legal framework and experienced arbitrators. This choice is usually made at the time the original investment contract is signed.
Award Enforcement
Decisions rendered by the tribunal are enforceable in over one hundred and sixty countries under the New York Convention. Unlike a court judgment, a decision from foreign arbitration is difficult to appeal and must be recognized by local courts with very few exceptions. This treaty based framework makes it easier for a winning party to seize assets in the home country of the defendant.
It provides a level of security that domestic litigation cannot match in cross border deals.
Neutrality Benefit
Private dispute resolution ensures that neither party has a home court advantage in a legal battle. Through foreign arbitration, investors avoid the risk of local bias in the judicial process of a foreign state.
