Arbitration under international law

03 Aug 2025 --
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Arbitration under International Law is a method of resolving disputes between states (and sometimes between states and non-state actors such as corporations) without resorting to the use of force or litigation before a traditional court. It involves the parties agreeing to submit their dispute to an impartial tribunal whose decision is binding.

🔹 Definition

Arbitration in international law is a consensual process in which disputing parties agree to resolve their conflict by submitting it to arbitrators, whose decision (the award) is final and binding.

🔹 Legal Basis

Arbitration is grounded in:

Consent of the parties – Usually by treaty, contract, or special agreement (compromis).

Customary international law – Supports peaceful resolution of disputes.

Article 33 of the UN Charter – Lists arbitration as one of the means to settle disputes peacefully.

🔹 Key Features

Voluntary but binding

Neutral and flexible process

Parties choose arbitrators and procedure

Limited appeal – awards are final unless flawed procedurally or jurisdictionally

🔹 Notable Arbitration Cases

Alabama Claims Arbitration (1872) – US v. UK; helped establish state responsibility and modern arbitration.

Island of Palmas Case (1928) – Netherlands v. US; confirmed principles of effective control in territorial sovereignty.

South China Sea Arbitration (Philippines v. China, 2016) – Major UNCLOS case under the Permanent Court of Arbitration (PCA), though China rejected participation and outcome.

🔹 Institutions Involved

Permanent Court of Arbitration (PCA) – Based in The Hague, facilitates state and investor-state arbitration.

International Centre for Settlement of Investment Disputes (ICSID) – Part of the World Bank, handles investment disputes.

Ad hoc tribunals – Formed for specific disputes (e.g., Eritrea-Ethiopia Claims Commission).

🔹 Advantages

Neutrality

Flexibility and confidentiality

Expert decision-makers

Avoids politicization common in courts

🔹 Limitations

Enforcement may face resistance (especially if no strong enforcement mechanism exists)

State sovereignty concerns

Limited transparency (especially in ad hoc cases)

Non-participation (e.g., China in South China Sea case)

🔹 Comparison: Arbitration vs. Adjudication (e.g., ICJ)

Feature	Arbitration	Adjudication (ICJ)
Consent	Always required	Required but can be by treaty or declaration
Choice of Judges	Parties appoint arbitrators	Judges are permanent, elected
Flexibility	High	Less flexible procedural rules
Confidentiality	Often private	Generally public