Arbitration in France, the Czech Republic and at the international level (2006)

Abstract

Aristotle wrote, "For an arbitrator goes by the equity of a case, a judge by the law, and arbitration was invented with the express purpose of securing full power for equity."

Arbitration is a form of Alternative Dispute Resolution, specifically, a legal alternative to litigation whereby the parties to a dispute agree to submit their respective positions (through agreement or hearing) to a neutral third party, the arbitrator(s) for resolution. The decision is binding and avoids State jurisdiction.

Although arbitration is often referred to as an innovation, it has in fact existed for centuries. Archaeologists have uncovered evidence of the use of arbitration in the ancient civilizations of Egypt, Mesopotamia and Assyria. Arbitration was extensively used by the ancient Greeks and Romans and in a form of substantially similar to that used today.
In France, arbitration first appeared in the 13th century during the trade fairs.

Formerly, all arbitration was contractually based, which meant that it was private and voluntary. Recently, a non-consensual type of arbitration has evolved, which operates under the aegis of the courts, but remains an alternative to the full use of the litigation system.

In commercial fields, arbitration is an important mean to settle disputes. Indeed, this importance lies in its finality. Generally, private arbitration awards are binding on the parties, and cannot be overturned except on very narrow grounds, since most of the time it is a single-instance case. Arbitration resolution is binding, and in the same time, it stays a mean of resolution which enables parties to have a broad freedom, even to deem in equity instead of material law.

Moreover, it is preferred for the lower costs than a traditional trial. However, fees of arbitrators can sometimes be high. In addition, a lot of businessmen and enterprises favour this kind of resolution for its discretion, so necessary in the business world, since it is private and less formal. Another important advantage of arbitration is the use of experts to resolve disputes, which is beneficial for a dispute in a specific field.

And the last advantage is the celerity of this procedure, among other things owing to the single-instance resolution.

For international commercial transactions, parties may face many different choices when it comes to including a mechanism for resolving disputes arising under their contract. If they are silent, they will be subject to the courts of wherever a disaffected party decides to initiate legal proceedings and believe it can obtain jurisdiction over the other party. Or they can choose a method of dispute resolution, which can be either litigation before the domestic tribunal of one of the parties, or arbitration. If the parties choose to resolve their disputes in the courts, however, they may encounter difficulties. The first is that they may be confined to choosing one or the others' courts, as the courts of a third country may decline the invitation to devote their resources to deciding a dispute that does not involve any of that country's citizens, companies, or national interests. The second, and perhaps more significant difficulty, is that judicial decisions are not very "portable"; in that it is difficult and sometimes impossible to enforce a court decision in a country other than the one in which it was rendered.