arbitration
n. The determination of a dispute by one or more independent third parties (the arbitrators) rather than by a court. Arbitrators are appointed by the parties in accordance with the terms of the arbitration agreement or in default by a court. An arbitrator is bound to apply the law accurately but may in general adopt whatever procedure he chooses and is not bound by the exclusionary rules of the law of evidence; he must, however, conform to the rules of natural justice. In English law, arbitrators are subject to extensive control by the courts, with respect to both the manner in which the arbitration is conducted and the correctness of the law that the arbitrators have applied, although this control was loosened to some extent by the Arbitration Act 1996. The judgment of an arbitrator is called his award, which can be the subject of an appeal to the High Court on a question of law under the provisions of the Arbitration Act 1996. In some types of arbitration, it is the practice for both parties to appoint an arbitrator. If the arbitrators fail to agree about the matter in dispute, they will appoint an umpire, who has the casting vote in making the award. English courts attach great importance to arbitration and will normally stay an action brought in the courts in breach of a binding arbitration agreement. See also alternative dispute resolution.

The modern origins of international arbitration can be traced to the Jay Treaty (1784) between the USA and the UK, which provided for the determination of legal disputes between states by mixed commissions. The Hague Conventions of 1899 and 1907 contained rules of arbitration that have now become part of customary international law. The 1899 Conventions created the Permanent Court of Arbitration, which was not strictly speaking a court but a means of providing a body of arbitrators on which the parties to a dispute could draw. Consent to arbitration by a state can be given in three ways: (1) by inclusion of a special arbitration clause in a treaty; (2) by a general treaty of arbitration, which arranges arbitration procedures for future disputes; and (3) by a special arbitration treaty designed for a current dispute.

Examples of arbitration include the Clipperton Island Arbitration (France v Mexico) (1932) 26 AJIL 390; the Tinoco Arbitration (1923) 1 RIAA 369; and the Canada/France Maritime Delimitation Arbitration (1992) 31 ILM 1145. Sadly, some arbitration decisions have been ignored, e.g. the Beagle Channel Arbitration (Chile v Argentina) (1977) 52 ILR 93, in which the pope acted as mediator.

Arbitration between a state and a foreign national can be facilitated through the medium of the International Centre for Settlement of Investment Disputes (ICSID) based in Washington DC. Article 25 of the 1965 Convention on the Settlement of Investment Disputes Between States and Nationals of Other States extends to ICSID jurisdiction over investment disputes between “a Contracting State…and a national of another contracting State.”

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