Disputes are inevitable in financial industries.
Itand#39;s not a bad thing, though, as these differences help propel new improvements. What makes financial disputes damaging are the processes and results of most litigation procedures.
These disputes become even more crucial in financial services companies that reside in different countries. Variations in laws, roles, scope, and other factors all contribute to how easy it is to tip the balance scales.
International arbitration has become the choice to resolve cross-country financial disputes because of globalization and increased involvement from emerging markets.
What is Arbitration
Arbitration is another form of the dispute resolution process. Itand#39;s a peaceful and constructive way of resolving differences between parties without going to traditional court litigation.
One of its distinguishing characteristics is privacy. Financial services disputes benefit greatly from arbitration since itand#39;s private. Thereand#39;s no public hearing involved. All procedures remain private between both parties.
Here are the characteristics of international arbitration in detail:
This type of arbitration is consensual. Both parties must consent to the arbitration process. The arbitral tribunal will not have any jurisdiction unless thereand#39;s an agreement between parties to use this method. Adding a dispute clause on every contract both parties will sign can make this agreement formal even before any disputes arise.
Thereand#39;s neutrality in arbitration. Compared to traditional litigation, where one of the parties is deemed at fault and must defend their side, arbitration is neutral. Thereand#39;s no fault-finding involved. Instead, a peaceful resolution that benefits both parties is the goal. Some international arbitration has prior agreements to conduct the process on a neutral country.
The entire arbitration process is private. The dispute itself, together with the options presented, is all held in strict confidentiality. Anyone who is part of the arbitration, including the third-party arbitrators themselves, is bound by law not to disclose any information. Even notes taken during arbitration are destroyed after itand#39;s completed.
Compared to litigation proceedings, decision-making is given to a third-party instead of a judge. Both parties will agree who the sole arbitrator is or who will make up the tribunal. These arbitrators are commonly experts in the industry to help with making decisions.
Decisions are Final
The arbitration award, which holds the final decision of the tribunal, is most often final. There are minimal rights to challenge it. Compared to court litigation, there are few chances of making an appeal.
While thereand#39;s neutrality in almost every part of the process, the arbitration award takes effect in all countries. This global enforcement follows the rules of the New York Convention.
The Use of International Arbitration in Finance Transactions
With all the positive characteristics of international arbitration, some financial services are still on the fence about this type of dispute resolution. Those under the finance sector who choose international arbitration found these primary reasons crucial enough to do so:
- Financial models are already complex. However, the variation can even be more complex across different countries, making it confusing. It can make the entire dispute resolution process stretched out, requiring more time, effort, and money. Arbitration levels the playing field for both parties to arrive at an agreement peacefully.
- Enforcement of a foreign judgment can be challenging in certain countries. Since the final decision on international arbitration applies globally, there are no hoops to go through to make it enforceable regardless of the country.
Advantages of Arbitration over Litigation
The advantages of arbitration over litigation in resolving financial services disputes can be summed up based on the distinguishing characteristics shown earlier.
- The neutrality arbitration offers can transcend any restrictions enforced by different countries.
- The arbitration tribunal is consists of experts in the industry. Hence, their final decisions are well-informed and have a solid foundation.
- Privacy and confidentiality are critical approaches for commercially and financially sensitive matters such as Mandamp;A work.
- International arbitration has a faster procedure compared to litigation. Schedules are not dependent on other judge availability or other factors. There are also fewer expenses involved since international arbitration can also be done remotely through teleconferencing.
Choose Arbitration in Resolving Financial Disputes
International arbitration is less costly to both parties. Global enforcement of final decisions also helps ensure that you wonand#39;t have to face the same issues in other countries.
Arbitration success relies on experienced third-party arbitrators. Judge Sue Robinson is an expert in the arbitration of disputes in the financial services sector.