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Article provided by Sally & Fitch LLP
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In a growing, global economy where alternative dispute resolution is becoming more and more common, the
International Centre for Dispute Resolution provides an increasingly important forum for resolving international
business disputes.
What is ADR?
Alternative dispute resolution offers a different forum for resolving disputes than the traditional adversarial
court system. The two most common types of ADR are meditation and arbitration.
During mediation, parties work together with an impartial mediator in a more collaborative process to find a
solution to their dispute. The mediator typically does not have the authority to make any decision made by the
parties binding upon them. Parties may use the mediation process first before proceeding with the more formal
arbitration process.
Arbitration is more like an informal court proceeding than mediation. Each party is given an opportunity to
present its claim, supporting evidence and witness testimony before an independent and impartial arbitrator. The
arbitrator may be a single person or a panel. After each side has had an opportunity to be heard, the arbitrator
will issue a written decision to settle the dispute. The decision can include an award of damages. Unlike
mediation, arbitration decisions are generally binding and enforceable.
What is the ICDR?
The International Centre for Dispute Resolution is the international branch of the American Arbitration
Association (AAA). It was formed in 1996 to exclusively handle international disputes. The ICDR has
cooperative agreements with arbitral institutions in more than 40 countries and handles hundreds of cases each
year. The ICDR employs experienced and multilingual staff, case managers, arbitrators and mediators. The
ICDR can preside over arbitrations held anywhere in the world.
How does international arbitration work?
Generally, parties will have agreed to use arbitration to settle any disputes that may arise before a disagreement
ever occurs, usually through a clause in their contract or a separate arbitration agreement. The arbitration
agreement can stipulate how the process will work, where the arbitration will be held, how many arbitrators will
be used or even the specific arbitrator(s) that will decide the dispute. Parties also have the option of using
arbitration after the dispute arises, but all parties involved must agree to use the alternative forum.
To initiate the process, one party (the claimant) will file a written notice with an ICDR administrator and the
other party to the dispute. This notice, much like a typical legal complaint, will include the parties' decision to
use arbitration to settle the dispute, reference the contractual clause requiring arbitration (if applicable), provide
a concise statement of the facts of the dispute and any supporting evidence and list the type of remedy the
claimant is seeking from the other party.
Once the notice has been filed and received, the other party (the respondent) has 30 days to file its own written
statement (the defense statement) in response to the claimant's statement. The defense statement also may
contain any counterclaims by the respondent as well setoffs of any claims covered by the arbitration agreement
between the parties. The defense statement must be provided to the ICDR administrator and the claimant. After
the defense statement has been filed and received by the claimant, the claimant will have an additional 30 days
to respond to the defense statement.
If the parties did not provide a process for selecting the arbitrator or cannot come to an agreement on which
arbitrator to use, the International Arbitration Rules provide that the ICDR will select the arbitrator.
The procedure of the actual arbitration is much more flexible than the procedure used by courts. Unless the
parties have specifically agreed to a certain procedure, the arbitrator is allowed to conduct the arbitration in any
manner he or she sees fit. The only requirement is that each party is treated fairly and given equal opportunity to
be heard before the arbitrator.
Most arbitration proceedings are completed within 45 days, but may take longer at the discretion of the
arbitrator. The proceedings are completely private and confidential, unless the parties agreed differently or
controlling law requires otherwise.
How are final decisions made by the arbitrator?
After both sides have had a fair opportunity to present their cases and supporting evidence, the arbitrator will
issue a decision. If there is a panel of arbitrators, the majority vote will determine the outcome. The arbitrator's
decision is generally binding on the parties and enforceable.
Many countries have laws that recognize and enforce arbitration decisions. Currently, 144 countries have ratified
the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, the international treaty
requiring countries to recognize arbitration agreements and uphold and enforce arbitration decisions made by
other countries. A list of the countries that have ratified the treaty is available at the United Nations Commission
on International Trade Law Web site, available at www.uncitral.org.