NAME : Abdiweli Mohamed Ali

ID NUMBER : 664792

COURSE : Legal Environment of Business

COURSE CODE : MBA6030A

LECTURER : Dr. Eric Kibet

TASK : Identify various forums for resolution of local and

international commercial disputes ?

Internationally, the legal basis for the application of alternative dispute resolution forums in
disputes between parties be they states or individuals is article 33 of the charter of the united
nations which outlines the various commercial dispute resolution mechanisms that parties to
a conflict or dispute may resort to.

The ADR mechanisms are mainly intended for conflict resolution and have, as their major
selling point, their attributes of flexibility, low cost, lack of complex procedures, mutual
problem solving, salvaging relationships and their familiarity to the common people

International commercial arbitration, sometimes referred to as ICA, is the process of

resolving commercial disputes among transnational business parties through arbitrators
instead of courts. The decision of the arbitrator is generally binding on the parties in the
business dispute. International commercial arbitration cases require an agreement between
the parties, which can be a separate agreement, but that agreement is often created through an
arbitration clause inserted into a commercial contract.

International commercial arbitration law is widely used in commercial disputes for many
reasons, including:

 Choice of arbitrators  Control over rules and procedures

 Decision by someone with expertise in  International enforceability
the industry  Less time-consuming and complicated
 Distrust of foreign legal systems than litigation

It is used as an alternative to litigation and is controlled primarily by the terms previously

agreed upon by the contracting parties, rather than by national legislation or procedural rules. 
Most contracts contain a dispute resolution clause specifying that any disputes arising under
the contract will be handled through arbitration rather than litigation.  The parties can specify
the forum, procedural rules, and governing law at the time of the contract.

The business and investment community stands to benefit from international commercial
arbitration in many countries as this forum of ADR provides a viable system offering a
proper mechanism for the settlement of international and regional disputes.

This system is cost efficient with venues in close proximity thus offering convenience. The
existence of such a system has the capacity to boost cross-border trade and investment.21
Effective and reliable application of international commercial arbitration has the capacity to
encourage investors to carry on business with confidence knowing their disputes will be
settled expeditiously.

Perhaps the greatest strength of international arbitration is the ability to fashion procedural
and substantive flexibility. Investors and corporations have increasingly turned to
international commercial arbitration as the preferred method of dispute resolution of
international business disputes.Speed of resolution makes arbitration more attractive than use
of the courts of most, if not all, nations.

International commercial conciliation

International commercial Conciliation is an effective means of alternative dispute resolution

and can be usefully deployed for both international as well as domestic disputes, except that
in the conciliation of an international dispute certain facts assume greater importance than
they would in a domestic conciliation.
International conciliation, a third party conciliator or conciliation commission has the most
pronounced effect on the process, has been defined by scholars as: intervention in the
settlement of an international commercial dispute by a body having no political authority of
its own, but enjoying the confidence of the parties to the dispute and en-trusted with the task
of investigating every aspect of the dispute and of proposing a solution which is not binding
onthe parties.
 • litigation
• Litigation is certainly the most superior mechanism of commercial dispute resolution
when it comes to domestic enforcement. Nevertheless, the ease of enforcement of
arbitral awards is commonly viewed as a key advantage of arbitration
• A Contracting State is obliged to recognize arbitral awards made in other Contracting
States as binding and to enforce them in accordance with its procedural rules.
• International litigation is essentially based on consent. Consensual basis of litigation
means that no party can haul the other entity into court without the consent of the
other party.

QUESTION 4: Discuss pros and cons of ADR over litigation generally?

Advantages of ADR over litigation

• Neutrality– ADR is neutral to the law, language and institutional culture of the
parties, thereby avoiding any home court advantage that one of the parties may enjoy
in court-based litigation.
 The declaration of disputes takes place usually in private – helping maintain privacy.
 It is more feasible, financial, and proficient.
 Bureaucratic flexibility saves precious time and funds and nonexistence of stress of a
conventional trial.
• Confidentiality- ADR proceedings are private. Thereby, the parties can agree to keep
the actions confidential. This allows them to focus on the merits of the dispute
without concern about its public impact

Disadvantages of ADR over litigation

• There is no guaranteed resolution. With the exception of arbitration, alternative

dispute resolution processes do not always lead to a resolution.
• Arbitration decisions are final. With few exceptions, the decision of a neutral
arbitrator cannot be appealed. Decisions of a court, on the other hand, usually can be
appealed to a higher court.
• Participation could be perceived as weakness. While the option of making the
proceeding confidential addresses some of this concern, some parties still want to go
to court just on principle.