Arbitration, a term meaning “to reinforce, to strengthen,” is mostly preferred for its utility in handling disputes of an international nature. It has been developed to meet the need for a neutral jurisdiction that parties from different legal systems can trust.
The primary condition for resorting to arbitration is that the dispute must be arbitrable. Arbitrability is determined based on its relevance to procedural law and substantive law. In terms of procedural law, it refers to the ability to perform actions dependent on the will of the parties, such as settlement, acceptance, and waiver, on the subject of the case. In terms of substantive law, the parties must have the authority to exercise the right that is the subject of the lawsuit.
In this context, disputes related to real rights over immovable properties are not arbitrable, including disputes related to ownership, usufruct, easement, and mortgage. Disputes arising from criminal law, execution and bankruptcy law, rent determination, eviction, tax, and labor law are not arbitrable as well.
The second condition is that the parties must decide to resolve the dispute through arbitration. This decision is usually documented with an arbitration agreement. The arbitration agreement must be in writing. It can be in the form of an article to be added to the main agreement between the parties or a separate agreement.
Parties can choose between two methods: ad hoc arbitration or institutional arbitration. In ad hoc arbitration, without the administration and guidance of any institutional structure, the parties keep the process under their control, determining the arbitrators, the place of arbitration, the arbitration procedure, and the law themselves, or they grant the arbitrators authority to do all these tasks. They can still choose to apply institutional rules to the procedure of arbitration.
In institutional arbitration, it is necessary to select one of the many arbitration institutions available worldwide. Institutions like ICC, ICSID, WIPO can be chosen. In institutional arbitration, the procedure will proceed according to the arbitration rules of the selected institution.
