Whether or not arbitration as a dispute resolution mechanism is preferable to domestic courts will always depend on the individual details of any particular transaction. Nevertheless, in the past decades arbitration has grown increasingly popular as a method of resolving differences that may arise in a contractual relationship.

This growth may be attributed to the inexorable march of globalisation. Successful businesses are ever more dependent on agreements involving parties from two or more jurisdictions.

There is a natural, if often unfounded, suspicion about entrusting the outcome of a commercial dispute to the national courts of the other party. The compromise is frequently the choice of arbitration in a neutral venue.

There is also an often equally mistaken
perception that the arbitral process is cheaper and quicker than court-based litigation. In these respects, much depends on the nature of the dispute and how the parties conduct themselves. Confidentiality is another factor, although again the limits of this perceived
benefit are sometimes uncertain.

Perhaps the most compelling reason for choosing arbitration is the ease of enforcement of any award. In tandem with the increasing popularity of arbitration, many countries have become signatories to a variety of international conventions allowing the relatively simple enforcement of arbitral awards made in other jurisdictions.

The most successful of these is the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. As a result, it is often easier to enforce a foreign arbitral award than a foreign court's judgment in a party's home jurisdiction.

Arbitration in international commercial disputes received encouragement from national governments anxious to relive the burden on their domestic courts. The 1958 New York Convention was drawn up under the auspices of the United Nations (UN).

The UN also sought to encourage the use of arbitration by drawing up the Model Arbitration Law, which has been adopted with various modifications by numerous jurisdictions. Even England, often seen as the last bastion of judicial resistance to private justice, introduced most of the provisions of the Model Act into domestic law with the enactment of the 1996 Arbitration Act.

If arbitration has been chosen as the means of resolving future disputes, one of the most important elements is the seat of the arbitration. The seat of an arbitration is a key element in any arbitral process and there are a variety of considerations when choosing the legal location of an arbitration.

The convenience of the location for the parties and arbitrators, the availability of modern communications and facilities and the neutrality of the venue are all relevant.

What is often overlooked is that the law of the seat of an arbitration governs the proceedings. This factor becomes more important where a body such as the International Chamber of Commerce does not administer the proceedings.

If in an international contract the seat of the arbitration is named as London, then the Arbitration Act 1996 will apply. If Paris is chosen, then the proceedings will be subject to the New Civil Procedure Code. A choice of Geneva will invoke Chapter 12 of the Federal Decree on International Private Law.

Naming New York will make the parties subject to the Federal Arbitration Act of 1925. If the parties select Singapore or Hong Kong, the provisions of those jurisdictions' international arbitration acts will come into play.

Arbitrations are not entirely a private matter between the parties. The degree to which arbitral proceedings are independent of a national legal system is dependent on the amount of autonomy granted by that system.

The domestic legal framework of the seat of arbitration is also important, because there are occasions when parties to an arbitration may wish to avail themselves of the assistance of the courts.

The courts' intervention may be needed to appoint arbitrators if there is a breakdown of the selection process. Given that it takes time to constitute an arbitral tribunal even when the parties are co-operating, it may be necessary to seek preservative or other interim measures from the courts at an early stage in the proceedings.

A party may wish to challenge the jurisdiction of the arbitrators over the particular dispute or the validity of the arbitration agreement generally.

In rare cases, there may be an issue over the impartiality or competence of an arbitrator. At a later stage, there may be the need to compel the other party to produce documents or to secure the attendance of witnesses. Finally, a party may wish to appeal against an interim or final award.

In some areas there are similarities of approach taken by the jurisdictions referred to earlier. To take the example of the appointment of arbitrators in the absence of agreement between the parties, English, French, Swiss, US, Singapore and Hong Kong law all provide for intervention to prevent the agreement to arbitrate being frustrated.

In all cases, with the exception of Singapore and Hong Kong, a party may apply to the court to appoint an arbitraltribunal.

In the latter two cases, the power of appointment has been devolved to the Singapore International Arbitration Centre and the Hong Kong International Arbitration Centre. In all cases, except Hong Kong, if the parties have failed to specify the number of arbitrators a single arbitrator will be appointed.

In Hong Kong, three arbitrators can be appointed. All the jurisdictions cited recognise the doctrine of separability: the concept that the agreement to arbitrate is to an extent divorced from the substantive
contract.

However, there are important differences, in practice and theory, between the jurisdictions referred to earlier in matters such as what disputes are arbitrable. Switzerland takes a broad view, even to the extent of allowing arbitrators to take account of EU competition law.

The US Supreme Court takes a similar view as regards federal antitrust law. Patent disputes are regarded by US law as capable of being arbitrated. The position under English, French, Hong Kong and Singapore law is less clear.

There are also significant differences in approach in matters such as compelling the production of documents and the attendance of witnesses. The French Civil Procedure Code is entirely silent on this matter.

The English, Swiss, Hong Kong and Singapore statutes enable an arbitrator's order covering these matters to be enforced through the courts, but with different tests as to when the court should render such assistance.

The US Federal Arbitration Act also allows for the assistance of the Federal Courts, but is subject to the limitation that any subpoena is only effective within 100 miles of the court making the order.

The ability to appeal against awards (as opposed to challenging them) varies from jurisdiction to jurisdiction. Most jurisdictions, in keeping with the idea of minimising court interference, do not allow any appeal from an arbitrator's award.

The English Arbitration Act does, however, allow appeals on a point of law, unless the parties exclude such a right.

Lastly, it is the courts that give effect to an arbitral award. As mentioned earlier, this enforcement is usually dependent on whether the jurisdiction where the award is made is a signatory to the 1958 New York Convention. Most countries that are signatories to the Convention operate on the basis of reciprocity.

Their courts will only enforce awards made in other signatory countries.

Equally, the grounds for modifying or setting aside an award in the jurisdictions mentioned vary to some degree. All are signatories to the New York Convention, which compels their domestic courts to give effect to foreign arbitral awards except on the grounds set out in the Convention.

However, the courts also have power to set aside awards made within their jurisdiction. These powers are generally used sparingly and the courts have shown a marked reluctance to vacate awards except in the most extreme cases.

The US Federal Arbitration Act lists four grounds for setting aside an award. The English Arbitration Act makes reference to "serious irregularities" and goes on to list examples of these. The Singapore legislation adds two additional grounds to those set out in the Model Law, while the Hong Kong statute is limited to those grounds set out in the Model Law.

The French and Swiss legislation list narrow grounds for setting aside awards.
One could cite several other important areas where a difference of approach in the domestic law of the seat may become a vital issue.

One example is the power to extend time for bringing arbitration proceedings outside statutory or contractual time limits. Another is the right of audience in arbitral proceedings. Most jurisdictions allow the parties complete freedom of choice.

Singapore takes a more restrictive view.
As many commentators have lamented, an arbitration clause is often the 'Cinderella' of a commercial agreement, dropped into the document at the last moment with little thought as to its possible implications if a dispute should ever arise.

Careful drafting can overcome many of the uncertainties discussed above. However, taking the time to seek expert local counsel before sticking a pin in the atlas is the only way of minimising the risk of subjecting your client to unnecessary cost and delay, whether they are bringing or defending a claim.

Richard Stewart is a partner in the London office of Bryan Cave.