The Growing Impotance of International Arbitration in International Commerce

Abstract

Following the rise and growth of globalization and emerging economies, business misunderstandings and disputes that transcend national borders may also be increasing. Such disputes could impede the functioning of international commerce. National legal mechanisms may not be an attractive option for international investors. On the contrary, international arbitration has become the preference of foreign investors through which many disputes can be resolved via an independent forum. To offer insights on this issue theoretically and empirically, this paper presents a discussion to investigate why international arbitration is important for the functioning of international commerce. The paper finds that international arbitration is conductive to promoting foreign direct investment, bringing cost and speed benefits and providing finality in the decision-making process. This proposition will be substantiated by focusing on previous research and particular examples.