What is arbitration?

The determination of a dispute by one or more independent third parties (the arbitrators) rather than by a court. Arbitrators are appointed by the parties in accordance with the terms of the arbitration agreement or in default by a court. An arbitrator is bound to apply the law accurately but may in general adopt whatever procedure he chooses and is not bound by the exclusionary rules of the law of evidence; he must, however, conform to the rules of natural justice.

 In English law, arbitrators are subject to extensive control by the courts, with respect to both the manner in which the arbitration is conducted and the correctness of the law that the arbitrators have applied, although this control was loosened to some extent by the Arbitration Act 1996. The judgment of an arbitrator is called his award, which can be the subject of an appeal to the High Court on a question of law under the provisions of the Arbitration Act 1996.

A 1979Arbitration Act abolished the old special case procedure. In some types of arbitration it is the practice for both parties to appoint an arbitrator. If the arbitrators fail to agree about the matter in dispute, they will appoint an umpire, who has the casting vote in making the award. English courts attach great importance to arbitration and will normally stay an action brought in the courts in breach of a binding arbitration agreement. See also ALTERNATIVE DISPUTE RESOLUTION. The modern origins of international arbitration can be traced to the Jay Treaty (1784) between the USAand the UK,which provided for the determination of legal disputes between states by mixed commissions. 

The Hague Conventions of 1899 and 1907contained rules of arbitration that have now become part of customary international law. The 1899Conventions created the Permanent Court of Arbitration, which was not strictly speaking a court but a means of providing a body of arbitrators on which the parties to a dispute could draw. Consent to arbitration by a state can be given in three ways: (1) by inclusion of a special arbitration clause in a treaty; (2) by a general treaty of arbitration, which arranges arbitration procedures for future disputes; and (3)by a special arbitration treaty designed for a current