International Disputes
An international or territorial dispute is a disagreement over the rights of two or more states with regard to control of a given piece of land. International disputes find their roots in a number of issues including natural resources, ethnic or religious demography, and even ambiguous treaties. When left unchecked, international disputes have caused criminal actions, terrorism, wars, and even genocide—all in the name of reasserting rights over territory. The UN Charter in no way allows states to use force to annex territory from any other state: “All Members shall refrain in their international relations from the threat or use of force against the territorial integrity or political independence of any state, or in any other manner inconsistent with the Purposes of the United Nations.”
Arbitration can be made an appropriate international dispute settlement mechanism for international disputes when arbitration agreements are carefully drafted. Arbitration is especially valuable in contract disputes between a private company located in a Western nation and a government agency or government-controlled company in a developing state as well as in the framework of East-West trade agreements. Parties to international contracts often favor arbitration because compared to litigation they believe it is inexpensive, rapid, informal, generative of consensus, and a means of minimizing or avoiding the need for lawyers. These advantages are partially attainable through the careful structuring of the arbitration agreement, but without the proper agreement they can prove illusory.
If the advantages of arbitration are to be achieved, the drafter of an arbitration clause must be particularly aware of the role of law in arbitration. At its inception, arbitration depends on statutory approval; the arbitral award often must be converted into a judgment for enforcement purposes. Also, throughout the arbitration process, the law intervenes (a factor which a good draftsman of an arbitration agreement should bear in mind). The drafter of an arbitration agreement must also take into account the rules for contesting the validity of an arbitral award in the jurisdiction in which the dispute is heard. Generally, parties to an international contract should not opt for arbitration in the event of a dispute without careful consideration of the reasons for its ues and the thoughtful, precise drafting of the arbitration agreement.
