Practical Issues in Commercial Arbitration: Real-Life Examples for Applying Theoretical Knowledge

Introduction

Commercial arbitration has become one of the most prominent alternative methods for resolving disputes between commercial parties due to its various advantages, such as speed, privacy, and specialized expertise in the relevant field of dispute. Unlike formal courts, commercial arbitration is characterized by its informal nature and procedural flexibility, allowing parties to select arbitrators and establish the rules that will govern the arbitration process. To effectively apply legal theories in this context, it is essential to understand the practical issues that parties and arbitrators may face in reality. This article will review some practical issues in commercial arbitration that highlight the challenges and the application of theoretical knowledge to real-life cases.

Practical Issues in Commercial Arbitration

1-Selection of Arbitrators
The process of selecting arbitrators requires careful consideration, as arbitrators must possess sufficient expertise and knowledge relevant to the case. Disagreements may arise between the parties over this selection, which could lead to delays or even involve the court to appoint arbitrators. A real-life example of this situation involved two construction companies that could not agree on a common arbitrator, necessitating court intervention.

2-Conflict of Interest
Conflict of interest is a sensitive issue in commercial arbitration, where an arbitrator must disclose any relationship they may have with one of the parties. In some real cases, financial or personal connections between an arbitrator and a party only surfaced after arbitration had started, resulting in the annulment of issued awards and the replacement of the arbitrators.

3-Enforcement of Awards
The enforceability of arbitration awards varies depending on the jurisdiction, and parties may face difficulties in enforcing an award if one of them is located outside the country where the award was issued. For instance, a multinational corporation encountered challenges in enforcing an arbitration award against a local company in a country that had not ratified the New York Convention on Arbitration, making enforcement extremely difficult.

4-Challenging Arbitration Awards
Although commercial arbitration relies on a final and binding decision, some parties may attempt to challenge it if they believe the proceedings were unfair. In an international arbitration case between two companies from different industries, one company exploited legal loopholes to challenge the award, resulting in prolonged disputes and delaying effective resolution.

5-Challenging the Arbitration Agreement
Challenging the arbitration agreement itself is another practical issue, where a party might claim that the arbitration agreement is not binding. In a famous case, a company contested the validity of the agreement on the grounds that it was signed under duress, successfully halting arbitration in that instance.

Conclusion

Commercial arbitration represents an effective and flexible solution for commercial disputes. However, it is not without practical challenges, which require a deep understanding of theoretical knowledge and its application in real life. By reviewing some practical issues, it becomes clear that successfully managing arbitration requires not only a strong grasp of legal rules but also the ability to handle various situations that parties and arbitrators may encounter. Thus, commercial arbitration remains an increasingly important tool, necessitating ongoing awareness of how to address practical challenges to ensure justice and efficiency in the resolution of commercial disputes.