ARBITRATION BEING THE ALTERNATIVE WAY OF SETTLEMENT OF INTERNATIONAL TRADE DISPUTES: AN APPRAISAL

Abstract

In a recent survey report of 2018 in the field of International Arbitration by White & Case LLP and the school of International Arbitration at Queen Mary University of London; it was mentioned that 98% of the companies would prefer to solve their dispute with the mechanism of International Arbitration rather than Litigation before courts.

International trade disputes should not be considered as an Alternative Dispute Resolution or Litigation Light. Instead it should be considered as a commercial arbitration which has become the dispute resolution mechanism of choice in international transactions and projects. If we go back in the history we’ll find out that in the Jay Treaty for the very first time arbitration was taken as a method to settle the international dispute after which a treaty was signed between The Great Britain and The United States of America mainly to settle outstanding issues following the American War of Independence.

In the Indian context if we see Article 51 (d) of the Indian Constitution it clearly states that the state shall endeavour to encourage settlement of international disputes by arbitration. International Arbitration is a method of private, binding and enforceable dispute resolution system which may be chosen by the parties as an alternative to litigation before the court.

Article 21.3 of the DSU provides that a Member found to be in violation of its WTO obligations must comply with the rulings and recommendations of the Dispute Settlement Body immediately. When immediate compliance is impracticable, however, the Member shall have a “reasonable period of time” to implement the DSB's rulings and recommendations. The “reasonable period of time” may be “the period of time proposed by the Member concerned, provided that such period is approved by the DSB” or “a period of time mutually agreed by the parties to the dispute”. If neither of these two options is possible, Article 21.3(c) provides that the “reasonable period of time” shall be “a period of time determined through binding arbitration”. Arbitrators are selected by the parties to the arbitration or, if they cannot agree on an arbitrator, the Director-General appoints the arbitrator. Thus far, every arbitration under Article 21.3(c) has been conducted by an Appellate Body Member acting in his individual capacity.