ARBITRATION
Parallel to the development of adjudication, the concept of arbitration made its way forward with significant success. Anumber of bilateral agreements provided for arbitration as a means to settle legal disputes.
Prominent among those agreements is the Jay Treaty of 1794, concluded by the USA and Great Britain which instituted arbitral tribunals to define the border between the USA and the then British territories in North America. No textbook of international law can ignore the famous ‘Alabama case'8 as an example of the settlement by arbitration of a serious legal dispute between the USA and Great Britain in the wake of the US civil war (1861-1865).On the eve of the 20th century, the concept of international arbitration enjoyed a renaissance when the two Hague peace conferences sought to establish a new institution in the form of a ‘Permanent Court of Arbitration' (PCA)9.
However, a closer look at the PCA reveals the weak character of this institution. It is neither a court nor an arbitral tribunal. Rather, it can be described as a roster of persons which states are free to choose as arbitrators if they wish to set up an arbitral procedure.
The PCAhas never played an important role and was overshadowed first by the Permanent International Court and later by the ICJ. Repeated efforts to revive the PCA have so far been unsuccessful.
On the other hand, one can observe that arbitration as a peaceful means to settle legal disputes has asserted its position quite vigorously both in the inter-state relationship and in the context of disputes involving states and private companies.
In recognition of the continued value of arbitration for the settlement of disputes, the UN General Assembly in 1958 adopted a resolution recommending to states a set of Model Rules of Arbitral Procedure as proposed by the International Law Commission. In a similar vein, the UN Commission of International Trade Law (UNCITRAL)10 drew up arbitration rules primarily for use of private companies.
This renewed interest in the instrument of arbitration for the settlement of international disputes has to do with the high degree of adaptability of arbitration procedures to the needs and requirements of the parties to the dispute in question. Another factor which makes arbitration attractive, in particular for businesses, is the expediency of the procedures which sets it apart from the more stringent rules applied by international courts in cases of litigation. Usually, arbitration is less expensive for the parties than litigation. For these reasons, the Paris based International Court ofArbitration, established within the framework of the International Chamber of Commerce, has become a great success story and is now the world's leading institution for resolving international commercial and business disputes. Since its foundation, the Court has handled 14,000 cases involving parties from all over the world. The vitality of modern arbitration techniques is also evidenced by the International Centre for the Settlement of Investment Disputes (ICSID)11, which, under the aegis of the World Bank, provides a very professional and efficient facility.In short, it can be said that arbitration is alive and well, even though its focus has shifted significantly from the domain of interstate relations to the area of international business and finance.