The ultimate guide to international arbitration

International arbitration has become the preferred method of resolving complex cross-border disputes. For businesses operating globally, it offers a flexible, confidential, and enforceable alternative to traditional litigation.

However, while the concept of arbitration is widely understood, the reality is far more nuanced. The strategic decisions made before and during proceedings can have a significant impact on cost, timing, and ultimately the outcome.

This guide explores international arbitration in depth, providing a practical, commercially focused perspective on how it works, when it should be used, and what businesses need to consider.

Contents

1. What is International Arbitration?
2. Why Businesses Choose Arbitration
3. Arbitration vs Litigation
4. The International Arbitration Process
5. Key Arbitration Institutions
6. Arbitration Rules Explained
7. Costs of Arbitration
8. How Long Does Arbitration Take?
9. Enforcement of Arbitral Awards
10. Arbitration in Sanctions and Cross-Border Disputes
11. Drafting Effective Arbitration Clauses
12. When Should You Choose Arbitration?

1.What is international arbitration?

At its core, international arbitration is a private dispute resolution mechanism used to resolve disputes between parties based in different jurisdictions. Rather than submitting a dispute to a national court, the parties agree to appoint one or more independent arbitrators who will determine the outcome.

This agreement is typically embedded within a contract, often long before any dispute arises. In practice, that clause can become one of the most important provisions in the entire agreement.

International arbitration is distinct from domestic arbitration in both scale and complexity. It commonly involves cross-border commercial arrangements, competing legal systems, and disputes that may span multiple jurisdictions. As a result, the process is often shaped as much by strategic considerations as it is by legal ones.

The final decision of the tribunal, known as an arbitral award, is binding and widely enforceable across jurisdictions. This enforceability is one of the key reasons arbitration is so heavily relied upon in international commerce.

2.Why businesses choose arbitration

For businesses operating internationally, arbitration is rarely chosen by accident. It is typically selected because it offers a set of advantages that traditional litigation struggles to match in a cross-border context.

One of the most important of these is neutrality of the process and adjudicators. Arbitration allows parties to avoid litigating in a foreign court system, which can raise concerns around bias, unfamiliar procedures, length of proceedings or lack of adjudicators’ expertise in complex commercial matters. Instead, the parties can agree on a neutral seat and a tribunal with relevant experience.

Neutrality is guaranteed by the freedom to choose a seat of arbitration in a jurisdiction with which none of the parties have any links and by the freedom to appoint arbitrators which are not any party’s compatriot.

Enforceability is another critical factor. Under the New York Convention, arbitral awards are recognised and enforceable in over 160 jurisdictions. In practical terms, this makes arbitration one of the most effective mechanisms for resolving disputes where assets or counterparties are located across multiple countries.

Confidentiality is also a significant consideration, particularly for businesses involved in sensitive disputes. Unlike court proceedings, which are typically public, arbitration is generally conducted in private. This can be particularly valuable where reputational risk, commercial relationships, or regulatory exposure are at stake.

Flexibility further distinguishes arbitration from litigation. The parties have considerable control over how the process is structured, including the choice of arbitrators, the governing law, and the procedural timetable. This flexibility allows arbitration to be tailored to the specific nature of the dispute.

Finally, arbitration enables parties to appoint decision-makers with specialist expertise. In complex sectors such as finance, construction, or energy, this can make a meaningful difference to how evidence is assessed and how decisions are reached.

In summary, businesses typically choose arbitration because it offers:

• A neutral forum for resolving disputes;
• Strong cross-border enforceability;
• Confidentiality as opposed to court proceedings;
• Control over the procedure; and
• Access to specialist decision-makers.

3. Arbitration vs litigation

The decision between arbitration and litigation is not always straightforward. While arbitration offers clear advantages in many international disputes, it is not universally the better option.

Litigation provides a structured, court-driven process with established procedural rules and a clear system of appeal. This can be beneficial in disputes where legal precedent is important or where interim remedies need to be obtained quickly.

Arbitration, by contrast, offers greater procedural flexibility and confidentiality, but typically limits the scope for a set aside. This makes the initial strategy and tribunal selection particularly important, as there are fewer opportunities to revisit a decision once it has been made.

In cross-border disputes, arbitration is often preferred because of its enforceability and neutrality. Where urgent intervention is required, the claimant may appoint an emergency arbitrator, which will order interim measures, e.g. where essential evidence is preserved. The respondent’s rights are preserved by the system of checks and balances, as the emergency arbitrator generally cannot become a member of the arbitral tribunal unless the parties agree. Moreover, once the tribunal is constituted, the party affected by the interim measure may submit an application to revoke it.

4. The international arbitration process

Although arbitration is flexible by design, most proceedings follow a broadly similar structure.
The process begins with an agreement to arbitrate, usually set out in a contractual clause. When a dispute arises, one party will initiate proceedings by submitting a request for arbitration, either to an institution or directly under agreed rules.

The formation of the tribunal is a critical stage. The parties may each appoint an arbitrator, with a chair selected either by agreement or by the administering institution. Alternatively, some arbitration rules provide that two party-appointed arbitrators shall choose the presiding arbitrator. The composition of the tribunal can have a significant influence on how the case is managed and ultimately decided.

Once constituted, the tribunal will establish the procedural framework for the arbitration. This includes setting out the timetable, determining how evidence will be handled, and deciding whether hearings will take place in person or remotely.

The seat of arbitration is distinct from the place of hearings. The hearing can be held in any place, and it does not have to be in the same country which is selected as the seat of arbitration. The choice of the place of hearing will not have any legal consequences on the procedure and the subsequent award, while the choice of seat will influence how fast the award will be enforced, i.e. how fast the award creditor will receive the funds. Since arbitration is not entirely delocalised and the court’s intervention is required to enforce the award, the choice of the seat is crucial. For that reason, practitioners have identified so-called arbitration-friendly jurisdictions, London being the top one of them.

The parties exchange written submissions, setting out their respective cases in detail. These submissions are often supported by documentary evidence, witness statements, and expert reports. As a rule, there are two rounds of written submissions.

A hearing may follow, during which witnesses can be cross-examined and arguments presented. In some cases, particularly where the issues are primarily legal, the arbitration may proceed without a full evidentiary hearing.

The process concludes with the tribunal issuing its award. This decision is final and binding, subject only to very limited grounds for challenge.

At a high level, the process can be summarised as:

Agreement to arbitrate;

• Commencement of proceedings;
• Tribunal formation;
• Procedural setup;
• Written submissions;
• Hearing (if required); and
• Final award.

5. Key arbitration institutions

A number of institutions play a central role in administering international arbitrations, each offering its own procedural framework and administrative support.

The London Court of International Arbitration (LCIA) is widely regarded for its efficiency and strong procedural oversight. The International Chamber of Commerce (ICC), based in Paris, is one of the most frequently used institutions globally and is known for its scrutiny of arbitral awards.

For disputes involving states and their different limbs, the International Centre for Settlement of Investment Disputes (ICSID) provides a specialised framework for investment treaty arbitration.

In addition to institutional arbitration, parties may also choose to proceed on an ad hoc basis, often using the UNCITRAL Rules. This approach offers greater flexibility but typically requires more active management by the parties and tribunal.

The choice of institution can influence everything from cost and timing to procedural complexity, making it an important strategic decision. Arbitral institutions charge administration fees, which represent a certain percentage of the amount of the claims and fixed registration/filing fee. These payments cover case management services: arbitration centres appoint a case manager or a tribunal secretary from the institution who will assist the arbitrators and smooth out the arbitration process by maintaining communication between the parties and the tribunal, coordinating the case file, logistics, and providing secretarial services. Secretaries can also support the arbitration’s procedural aspects, such as assisting in the issuance of procedural decisions. However, by no means are the decision-making powers of the tribunal delegated to the secretaries.

6. Arbitration rules explained

Arbitration rules determine how proceedings are conducted, shaping the structure and flow of the dispute.

Institutional rules, such as those provided by the LCIA or ICC, offer a defined procedural framework supported by administrative oversight. This can provide certainty and help avoid procedural disputes during the arbitration.

Ad hoc arbitrations are most commonly governed by the UNCITRAL Rules. However, even arbitral proceedings administered by arbitral institutions can be governed by them. The main reason why parties opt for ad hoc arbitration is the consideration of economy, but they shall be mindful that ad hoc proceedings can become more expensive and time-consuming than institutional arbitration when parties fail to cooperate.

Key areas governed by arbitration rules include the appointment of arbitrators, the handling of evidence, procedural timelines, and the availability of interim measures.

Selecting the appropriate rules when drafting a contract is not simply a technical decision. It can have a direct impact on the efficiency, cost, and outcome of the arbitration, as well as on the route of arbitration (regular or expedited procedure). Moreover, as the rules are regularly updated and improved to better cater for the needs of the users, the recommended drafting technique is to refer to the rules in force at the time the arbitration commences, rather than specifying a specific year or version of the rules.

7. Costs of arbitration

The cost of arbitration is often a central concern for businesses, particularly in high-value or complex disputes.

Unlike litigation, where court fees are relatively predictable, arbitration costs can vary significantly depending on the nature of the dispute and the choices made by the parties.

Costs typically fall into several key categories:

• Arbitrators’ fees, which may be capped (typical for small claims) or billed at hourly rates;
• Institutional fees (where applicable);
• Counsels’ fees; and
• Experts’ fees.

 

In complex international disputes, these costs can be substantial.

However, arbitration can still offer value when viewed in a broader commercial context. The ability to enforce an award across jurisdictions, combined with the flexibility to streamline procedures, can offset higher upfront costs.

Careful strategic planning at an early stage can play a key role in managing costs effectively.

8. How long does arbitration take?

The duration of an arbitration will depend on a range of factors, including the applicable arbitration rules, complexity of the dispute, the number of parties involved, and the procedural approach adopted.

Arbitration rules of most popular arbitral institutions contain a clause that award shall be rendered within a certain deadline days after tribunal is constituted/ first procedural conference is held, and that tribunal shall also be constituted within a specified deadline calculated from the date the claimant filed the request for arbitration. In the unlikely event that the arbitrators fail to render an award within the recommended timeline, they shall explain to the arbitral institution why they need extra time, and the institution shall have the discretion over whether such deviation from default is indeed necessary in light of the circumstances of the dispute in question.

Depending on the arbitration clause of the contract, the parties with small and medium size claims may benefit from the so-called expedited procedure, which, as the name suggests, is a fast-rack arbitration. The deadline for the tribunal to render the final award is shorter, and the parties’ expenses are comparatively lower, as the tribunal usually consists of a sole arbitrator (instead of three) and this type of arbitration can be conducted without hearings, on the basis of written submissions only.

In any event, it is realistic to resolve the disputes within a year from the date when the claimant submits the request for arbitration. Comment by Elizaveta Rachkova: What was written before doesn’t advertise arbitration, why we included this in FAQ which aim to promote arbitration? That’s illogical and what they wrote about timeline isn’t correct

A clear procedural strategy, agreed at an early stage, is essential to maintaining momentum and avoiding unnecessary delay.

9. Enforcement of arbitral awards

One of the defining features of international arbitration is the ability to enforce awards across borders.

The New York Convention provides a framework for the recognition and enforcement of arbitral awards in over 160 jurisdictions. In many cases, this allows a successful party to pursue assets in multiple countries.

However, enforcement is not always straightforward. Challenges can arise where assets are difficult to locate, where counterparties resist enforcement, or where sanctions and regulatory issues complicate the process.

In high-value disputes, enforcement strategy should be considered from the outset, rather than treated as a separate, post-award issue.

10. Arbitration in sanctions and cross-border disputes

In an increasingly complex geopolitical environment, arbitration is frequently used to resolve disputes involving sanctions, regulatory restrictions, and cross-border commercial relationships.

These disputes often require careful coordination across multiple legal systems, as well as a detailed understanding of how sanctions regimes may affect both the arbitration process and the enforcement of any resulting award.

Issues such as asset tracing, jurisdictional risk, and regulatory compliance can all play a central role. As a result, these cases demand a highly strategic approach, combining arbitration expertise with broader dispute resolution and enforcement capabilities.

11. Drafting effective arbitration clauses

The importance of a well-drafted arbitration clause is often underestimated until a dispute arises.

Key elements such as the choice of seat, governing law, applicable rules, and the number of arbitrators can all have a material impact on how a dispute is resolved.

At a minimum, a strong arbitration clause should clearly define:

• The seat of arbitration (legal jurisdiction);
• The governing law of the contract;
• The arbitration rules and institution;
• The number of arbitrators; and
• The language of proceedings.

 

The consequences of ambiguities, omissions or mistakes in the clause range from objections to jurisdiction, delays, and increased costs to nullity of the clause as a whole or failure to submit the dispute to arbitration.

Careful drafting at the outset of a commercial relationship is therefore essential to ensuring that arbitration delivers its intended benefits.

12. When should you choose arbitration?

Arbitration is particularly well suited to disputes involving parties in different jurisdictions, where neutrality and enforceability are key considerations.

It is also often preferred in high-value or complex disputes, where the ability to appoint specialist decision-makers can provide a significant advantage. Arbitrators do not have to be lawyers – they can have extensive expertise in construction or valuation, therefore allowing the parties to save on appointment of experts from each side, which is another underestimated advantage over litigation.

However, arbitration is not always the right choice. In situations where urgent court intervention is required, or where a clear right of appeal is important, litigation may be more appropriate.

The decision should always be guided by the specific commercial and legal context of the dispute.

How Gherson supports international arbitration

Gherson advises on complex, high-value international disputes, bringing together expertise in arbitration, litigation, and asset recovery.

The firm supports clients at every stage of the arbitration process, from strategic advice and clause drafting through to representation and enforcement.

With particular experience in cross-border disputes and matters involving sanctions, Gherson provides a coordinated, commercially focused approach to dispute resolution.

Final thoughts

International arbitration remains a cornerstone of global dispute resolution. Its flexibility, enforceability, and neutrality make it a powerful tool for businesses operating across borders.

However, its effectiveness depends on the decisions made at every stage of the process. From drafting the arbitration clause to enforcing the final award, a strategic and informed approach is essential.

For businesses facing complex international disputes, early engagement with experienced advisors can make a decisive difference to the outcome.

Frequently Asked Questions

What is the difference between international arbitration and domestic arbitration?
International arbitration involves parties from different jurisdictions and typically engages cross-border legal issues, international rules, and enforcement considerations. Domestic arbitration, by contrast, is confined to a single legal system and is generally less complex from a jurisdictional perspective.

Is arbitration legally binding?
Yes. An arbitral award is final and binding on the parties, with only very limited grounds for challenge in the courts of the seat of arbitration.

Can arbitral awards be enforced internationally?
In most cases, yes. Under the New York Convention, arbitral awards are recognised and enforceable in over 160 jurisdictions, making arbitration particularly effective for cross-border disputes.

Is arbitration always confidential?
While arbitration is pending, it remains confidential, but the extent of confidentiality depends on the applicable rules, as some arbitral institutions such as ICC publish awards after some time has passed, unless objected to by the parties. Alternatively, the award can become public when the court discloses details of the case in its decision on the set aside application.

How much does international arbitration cost?
Costs vary depending on the value of claim, complexity of the dispute, the arbitral institution used, and the track of arbitration. They generally include arbitrators’ fees, institutional fees, legal costs, and experts’ fees.

How long does international arbitration take?
Usually disputes may conclude within 6–12 months. Longer periods of time may be expected when the cross-border enforcement of the award is involved. For that reason, when drafting arbitration clause of the contract it is important to ensure that the chosen seat of arbitration is arbitration-friendly.

Can you set aside an arbitral award?
Parties may apply to the state courts at the seat of arbitration to set aside the award. Setting aside an arbitration award is generally limited to procedural grounds rather than substantive errors of law or fact . The exhaustive list of grounds for a set aside is regulated by the laws of the state of the seat of arbitration. The court acts in a supervisory capacity rather than as an appellate body, meaning it does not review the merits of the case.

When is arbitration a better choice than litigation?
Arbitration is often preferable in cross-border disputes where neutrality, confidentiality, and enforceability are key considerations. Litigation may be more suitable where urgent court intervention or broader appeal rights are required.

 

If you would like to speak to us in respect of any of the issues raised in this article or about your specific circumstances, do not hesitate to contact us for advice, send us an e-mail, or alternatively, follow us on X, Facebook, or LinkedIn to stay-up-to-date.

The information in this blog is for general information purposes only and does not purport to be comprehensive or to provide legal advice.  Whilst every effort is made to ensure the information and law is current as of the date of publication it should be stressed that, due to the passage of time, this does not necessarily reflect the present legal position.  Gherson accepts no responsibility for loss which may arise from accessing or reliance on information contained in this blog.  For formal advice on the current law please do not hesitate to contact Gherson.  Legal advice is only provided pursuant to a written agreement, identified as such, and signed by the client and by or on behalf of Gherson.

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