Disputes Settlement by Arbitration 375
Wl-iilstit is accepted thatthe simplest and quickest wayofresolving disputes is
throughnegotiation,it isnotinfact aneasy method, especiallyif there is a clash of
personalities behind the dispute, or if in the parties' opinion thereare matters of
principle at stake. Furthermore, until any of the other methods of dispute reso-
lutionhave been invoked,thecosts involved arerarelyappreciated. In some cases,
parties embark onlitigation simply becausetheywant their day in court; in other
cases some are badly advised.
Internationally,the parties face a number of additional uncertainties,problems,
risks andfears. These range from having to dealwith people of differentcultures,
language, customs,laws andbusiness practicesto having toselectforeignlawyers
to dealwith a foreignjudicial process about whose neutrality and independence
they may have serious doubts.194 Furthermore,if the chosen forumfor dispute
resolution is litigation, then the courtsof at leasttwo differentjurisdictions may
compete for supremacy and would often have overlapping roles with con-
sequential difficultiesin the enforcementof foreignjudgments.
It canbe said that international commercialarbitration provides an answer to
many of these problems, risks and fears and particularly inrespect of the recog-
nition and enforcementofforeignawards through the 1958 New YorkConvention
and other sinilar international arbitral treaties. For that reason, it hasbeenchosen
as the preferred forum for disputeresolution in the international field and has
been influential in facilitating international trade, investment and economic
developmentaroundthe world. The most important question,therefore, revolves
aroundthe features andthewordingof a clause describing themanner inwhich
disputes can be resolved with fairness,justice, speedand relative economy.
19.2 Advantages of arbitration
Where arbitration is chosen as the appropriate and most effective method of
dispute resolution, suchchoiceis madebecause ofthe many inherent advantages
in arbitration, especiallywherethere is a technical dispute to be resolved. These
advantages are:
(a) Theparties indisputeare incontrol ofthe identity ofthe personto whom they
entrusttheresolution of the dispute.
(b) The parties in disputeare ableto choose as an arbitrator someone who is an
expert in the fieldof the dispute, be it technicalor legal.
(c) Unlike the procedure in litigation,pleadings are submitted at or close to the
appointment of the arbitrator. This enables himto start with the case and to
continue to be inclose touch with the stepstakenbybothsides, thus allowing
him to knowthe case as it develops and to knowthe parties andtheirlegal
representatives.
(d) The processcanbeexpeditiousand cost-effective, ifthe parties wishittobeso.
376 The FIDIC Form ofContract
(e) The procedure is private, thus avoiding any undesirablepublicity.
(f) Arbitration procedure is flexible and adaptable to the particular dispute or
disputes.
(g) The conduct throughout is less formal than court procedure without aban-
doningcourtesy.
(h) It is possible to arrange for an inspection of the project and the matters
relating to the dispute.
(i) Depending upon the applicable law of the contract, the awardrenderedby
the arbitrator in most jurisdictions is final and binding unless it can be
shown that the arbitrator has erred in law or has misconducted the pro-
ceedings.
(j) It can be conducive to a negotiated settlement even at a late stage of the
proceedings.
(k) Insomejurisdictions,the arbitrator has greater power than the courts toopen
up, review and revise the decisionof the engineer.195
(1) Tn international commercialcontracts, the recognition and enforcementof a
foreign arbitral awardis much easier than a judgment of court. This is made
possible by a numberof international multilateral arbitral treaties and con-
ventions. The most significant of these is the 1958 New York Convention on
the Recognitionand Enforcementof Foreign Arbitral Awards as it has been
acceded to by over 100 different jurisdictions worldwide. It has been
described as the single most important pillar on which the international
arbitration edifice rests and that it 'perhaps could lay claim to be the most
effective instance of international legislation in the entire history of com-
mercial law'.196 It is reportedthat an estimated 98 per cent of awards in
international arbitration are honoured or successfully enforced and that
enforcementby national courtshas only beenrefused inless than5 percentof
cases,justifying the claim that it is far easier to enforce arbitration awards
than courtjudgments.197
(m) A developed and highly respected system of arbitration law, relatingto
national and international arbitration, supportedby the judicial establish-
mentand its policy-makingorgans is highly favourable on the international
scene from the point of view of encouraging foreign investment into a
developingcountry. Itis seen as a safeguardto thatinvestmentagainst unjust
and haphazarddecisionmaking.
19.3 What is arbitration?
Arbitrationis a process whereby parties in disputeagree to submit the matter in
disputeto the decisionof a person or persons inwhomtheyhaveconfidenceand
trust and undertake to abideby that decision. The prerequisites to a valid arbi-
trationare:
