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Introduction
During the late 1980s and 1990 many people became concerned that the traditional method of resolving legal disputes in United States had become slow, expensive and cumbersome for many civil lawsuits. This concern led to the development of alternative ways of litigation to resolve disputes. Collectively these alternative ways are called ADR(Alternative Dispute Resolution). In the early 2000s many people became interested in ADR techniques as they gave the disputers more privacy and they could be solved more quickly and cheaply. Another advantage of ADR techniques is that they are more focused on the problem whereas conventional litigation techniques are more focused on the adversarial method. Today fewer than Five percent of all disputes go to trial, the rest of the disputes are solved beforehand using different ADR techniques. Now litigation has become the alternative of ADR. The term ADR consists of a vast array of non-litigation techniques including mediation and arbitration. Arbitration and ADR processes, which occur generally out-of-court, do not compete with State court proceedings. Court Proceedings, Arbitration and ADR are complementary processes. Arbitration could not have prospered without the state courts cooperation and ultimate control. Arbitration has become a frequently used method of resolving international commercial disputes and is presently the only legally binding and enforceable alternative to state court proceedings. Parties can choose to- and sometimes have to- bring their case before a state court or national administrative authority. For example, such a case maybe customs valuation disputes. In a case of international dispute, a party can feel troubled. The dispute could be tried before the courts of other partys place of business, before the other partys nationals, in other partys language, and according to the procedural rule of the opponents country. To achieve neutrality and flexibility, Arbitration and Mediation processes have been developed. There are other considerations as well: Time constraints, the need for specialized knowledge, confidentiality and international enforceability. These are all good reasons for using arbitration or ADR.

Definition of Arbitration
Arbitration is an out of court proceeding in which a neutral third party called an arbitrator hears evidence and then makes a binding decision. Arbitration is the most commonly used method of Alternative Dispute Resolution. Arbitration can be binding (which means the arbitrator will follow the arbitrators decision and courts will enforce it) or nonbinding(which means that either party is free to reject the arbitrators decision and take the dispute to court as if the arbitration never took place). Binding arbitration is most common. Arbitration resembles a traditional litigation in the way that a third party hears the case of both the party and imposes of final and binding decision enforceable by court. In arbitration both the parties agree to the arbitration cause before the dispute arises. The

2 disputants usually decide on the neutral third party and proceedings are typically less formal than in a court of law. One important distinction is that unlike the litigation cases the arbitration cases has no appellate procedure. Thus when an arbitration decision is issued, the case is ended. Final and binding arbitration has long been used in labor-management disputes. For a long time people have found that its advantageous to have a third party arbitrator. Such an arbitrator can easily and cheaply resolves their disputes. A very important advantage of arbitrator is that without going to the court the strikes and lockouts can be avoided. Given this very successful track record, the businesses have become more enthusiastic about arbitration. According to the free legal dictionary arbitration is, The submission of a dispute to an unbiased third person designated by the parties to the controversy, who agree in advance to comply with the award- a decision is to be issued after a hearing at which both parties have an opportunity to be heard.[1] According to international law, Arbitration is the judicial methods to the settlement of international disputes. [2] According to Britannica Concise Encyclopedia, Process of resolving a dispute or a grievance outside a court system by presenting it for decision to an impartial third party.[3] Now a new form of arbitration, known as court-annexed arbitration, has emerged. Many variations of court-annexed arbitration have developed throughout the United States. One can be found in Minnesota, where, in the mid-1990s, the Hennepin County District Court adopted a program making civil cases involving less than $50,000 subject to mandatory nonbinding arbitration. The results of that experimental program were so encouraging that legislation was later enacted expanding the arbitration program statewide. As of 2003, most cases were channeled through an ADR process before they could be heard in the courts. A growing number of other federal and state courts were adopting this or si milar approaches. Arbitration: In The Context of Bangladesh As Bangladesh gets ever more closely integrated with the global economy, the proliferation of international commercial disputes involving Bangladeshi and foreign business partners is becoming inevitable by-product of this process. In line with experiences of other commercially active countries, there is now a greater recognition in Bangladesh about the arbitrations advantage over litigation in settling expeditiously these cross-border commercial disputes as well as in effectively making available this service to the business community. Arbitration of course is not a new thing in Bangladesh. There has been a long tradition in Bangladesh of arbitration and mediation as a non-adversarial but effective mode of dispute resolution. The well known process of shalish (mediation) for settlement of all types of disputes (both commercial and non commercial nature) is still widely

3 practiced specially in the country-side. The main plank of this mode is the presence in the community in question of highly regarded and worldly-wise personalities. The legally annexed Alternative Dispute Resolution (ADR) mechanism also came into operation in Bangladesh in the early part of the last century when it was introduced specially for handling the disputes in formal sector. Until 1940, this arbitration process for dispute settlement was governed by the code of civil procedures, 1908. In that year in 1940, a separate act styled as Arbitration Act , came into being embodying in it a comprehensive set of laws on the subject. But the Arbitration Act, 1940 was perceived by many to be primarily focused on settlement of disputes between domestic parties despite the fact it was intended as well for resolving international commercial disputes. There were other factors which also stood on the way of wider use of procedures of Arbitration Act,1940. These included extensive role of the courts in the process of arbitration, its supervision and the enforcement of arbitral awards. The enforcement of arbitral award was found to be slow and cumbersome. An award could only be enforced after obtaining an order from the District Court and that was a slow and much contested process. There was also considerable doubt whether it was possible to enforce foreign arbitral awards despite the fact that Bangladesh acceded in 1992 to the New York Convention,1958. As a consequence, the settlement of international commercial disputes through arbitration under the provisions of the Arbitration Act, 1940 did not gain wide spread acceptance specially of the foreign business associates of Bangladeshi firms. The government organizations during its procurement of foreign goods and services of foreign experts tried to insist on following the procedures and provisions of the Arbitration Act, 1940 and the incorporation of arbitration-clauses on these lines in the contracts signed with the foreign suppliers. These were successful mainly in respect of bulk purchases of food grains by the Ministry of Food and in respect of procurement of bulk items like cement etc. by trading Corporation of Bangladesh (TCB) of the ministry of Commerce. The foreign suppliers, generally in most other cases suggested incorporation of clauses providing for having arbitration at Singapore and or Construction projects, the foreing contractors generally insisted on employing FIDIC (International Federation of Consulting Engineers) Standard form of contract (for use between employer, and contractor) where appropriate procedures for dispute resolution claim by either party against the other are also set out. These include provision for disputes to be heard by a dispute Adjudication Board. In the case of World Bank assisted projects, the Standard Bidding Document(SBD) are employed as matter of course stipulating therein that there has to be a Dispute Review Board (DRB) for settling disputes. Thus there were no noteworthy instituition which had come forward to give it (Arbitration Act,1940 procedures) a support through usage. Among the organization, only the Metropolitan chamber of Commerce and Industries (MCCI), Dhaka had been conducting under its aegis a few arbitration case involving disputes in jute trading. Thus, there were demand from and within the commercial network for a more modern and flexible arbitration law which would give confidence to the local parties as well as to those coming form markedly different national, cultural and legal backgrounds and were unfamiliar with our court procedures along with those who wanted to avoid damaging publicity. The growing logjam situation in the courts resulting in long delays, high costs as

4 well as widely shared perception of corruption was other compulsions. It was realized that an Arbitration Law, which was based on UNCITRAL Model law and gave full effect to Bangladeshs commitment under New York Convention, 1958 as well as offered protection of business confidentiality would be the needed answer. Hence the Arbitration Act,2001 was enacted and the 1940 Act repealed. This Act Arbitration Act,2001 came into effect on April 10.2001 through the Gazette Notification: SRO No. 87 Law/2001.

Types of International Business disputes and possible remedies:

Contracts on sale of goods When the contract concerns the sale of goods , a dispute may arise with respect to, among other things, the quality of the goods, their price and payment, transportation, and conditions of delivery. Disputes could be avoided by providing clear stipulations on these matters in the contract itself. Distributorship, agency and intermediary contracts With a distributorship agreement, disputes may arise, again, over many different aspects. For example: The manufacture/ Vendor fails to supply the goods to the distributor/agent in conformity with the contract, or at the time provided in the contract; The manufacture/ Vendor supplies the goods to competitors of the distributor/agent, in a situation where the distributorship contract clearly stipulates exclusively for the distributor/agnt; The distributor/ agent fails to purchase from the manufacture/ vendor the quantities that are contractually stipulated, or fails purchase at the time agreed.

Intellectual property contracts It is likely that an international business contract also involves aspects of intellectual property rights, such as patent licensing, trademarks, technical assistance and transfer of technology or know-how. Disputes arising from IP licences come in a wide variety of forms. They may be about: Whether royalties are payable The amount of royalties due Whether new product developments are covered by the licence The circumstances under which a party is entitled to terminate the licence

Joint Venture Agreements:

Since large business projects are often conceived in the form of a joint venture agreement between different companies, located in different countries, the drafting of the joint venture agreement usually involves a wide variety of issues. These may include such matters as: The contribution of each participants to the joint venture company The production and exploitation of licences Arrangements for technical assistance The supply and training of qualified personnel Currencies and the ways in which payments should be made or received The termination of the joint venture

The complex structure of an international joint venture agreement requires an appropriate method for the settlement of disputes. A state court may not be the best forum for dealing with such a dispute, since different legal systems may be involved. An international panel of arbitrators with experience in the field may be better suited to deal with such questions.

Illustration and Proposition in the light of Law of Contract

A contract bearing Arbitration Clause binds the parties to arbitrate with each other in case of any dispute out of the contract and no party can seek remedy without exhausting the Arbitration Procedure embedded in the contract The above mentioned statement states that if two parties have a legal contract with each other then they can not seek remedy for any dispute out of the contract without attempting to arbitrate with each other. This statement has its base on the Law of Contract. Contract is an agreement in which two parties or more enter into a voluntarily agreement with the intention of creating a legal obligation. It can be written or oral. The remedy for breach of contract can be Damages or compensation of money. Following are the essential elements of Contract in the case of Arbitration: 1. Offer and acceptance : In an Arbitration there is an offer and acceptance, One party is offering other the scope of settling disputes outside the courtroom with less time, efficiency and privacy. 2. Intention to create legal relationship: Both the parties have an intention to create legal relationship as both parties are going into an agreement which is supported by the court.

6 3. Lawful consideration: The Arbitration agreement is legally enforceable as both the parties gives something and gets something in return. In this case both the parties are giving their assurance of an opportunity to save its reputation and time before going to the court of law. 4. Capacity of parties : An Arbitration agreement will not be possible if both the parties are not capable enough of going into contract. 5. Free consent: The agreement is done on free consent which means that no party is forcing them to choose to arbitrate. 6. Legality of the Object: The object of Arbitration is legal, as in most of the cases Arbitration occurs in business and lawful business has a legal object. 7. Certainty: The arbitration clause provides a certainty to the relevant parties as the terms are not vague. 8. Possibility of Performance: The arbitration clause is possible to perform and enact. 9. Void Agreements: These are agreements which in nature are void but Arbitration Agreements do not fall into this category 10. Writing, Registration and Legal Formalities: The Arbitration agreement can be written, registered and it has to follow the legal formalities to notify the existence of such a contract to the court of law. In the case of Arbitration, Not only the law of contract but also the rule of Law comes into consideration: The rule of law states that every person-irrespective of rank and status in society, be subject to the law. That means that both the parties included in Arbitration are subject to law enforced by the government. The rule of law dictates and protects the interest of the parties. It not only shows the direction but also protects the parties to act in a certain way.

The Arbitration Agreement also respects each party of the agreement as legal entities. These parties can be a person, a limited company or a trade union. Contracts can occur between two persons, a person and a limited company, a limited company and a trade union etc.

Relevant Arbitration Clauses:

7 There are two types of Arbitration: Instituitional Arbitration Ad-Hoc Arbitration

As institutional arbitration is conducted pursuant to the arbitration rules of a chosen institution, and with the assistance of that instituition. Ad Hoc arbitration proceedings are organized by the parties themselves. UNCITRAL adopted on 28 April 1976 ad hoc Arbitration Rules whose application is recommended for the resolution of disputes that arise out of international commercial relations. The parties thanks to these arbitration rules which govern ad hoc arbitration proceedings, mage arbitrate their disputes without having to resort to an arbitral institution. Institutional Arbitration Clauses: If parties wish to opt for instituitional arbitration, they should draft a clause that is as close as possible to the recommended standard clause provided by the selected arbitral instituition. For example,The parties could use the following clause: All disputes arising in connection with the present contract or in relation thereto as well as any other agreement signed or to be entered into in relation with the present contract shall be finally settled under the Arbitration Rules of(name of the instituition chosen) by one of more arbitrators in accordance with the said rules. The arbitration shall take place in (mention the place),(mention the country) The language of the arbitration shall be [4] Ad Hoc Arbitration Clauses: If the parties opt for ad hoc arbitration, it is recommended that they consider using the UNCITRAL Arbitration rules. In such a case, they should refer to the recommended UNCITRAL Arbitration clause. They should also specify in the clause an appointing authority. Example of a short-form Ad Hoc Arbitration clause for a sole arbitrator: All disputes arising in connection with the present contract or in relation thereto shall be finally settled by a sole arbitrator The claimant party shall notify its request for arbitration in writing and by registered mail to the defendant party; the latter shall answer in writing and by restered letter within 30 days from the receipt of the request of arbitration.

8 The parties shall attempt to appoint jointly the sole arbitrator within 30 days from the receipt of the answer, failing which the sole arbitrator shall be appointed by (mention the name of the instituition or arbitration center) acting in capacity of appointing authority, upon the request of any of the parties. The arbitration shall take place in (mention the place),(mention the country) The language of the arbitration shall be. [5]

The UNCITRAL model arbitration clause: Any dispute, controversy or claim arising out of or relation to this contract, or the breach, termination or invalidity thereof, shall be settled by arbitration in accordance with UNCITRAL Arbitration Rules as at present in force. Parties may wish to consider adding: a. b. c. d. The appointing authority shall be( name of the instituition present) The number of arbitrators shall be(one or three) The place of arbitration shall be(town or country The languages to be used in the arbitral proceedings shall be. [7]

Standard clauses recommended by Arbitral Institutions

International chamber of commerce All disputes arising out of or in connection with the present contract shall be finally settled under the rules of Arbitration of the international Chamber of Commers by one or more arbitrators appointed in accordance with said rules. [8] International Center for Dispute Resolution of the American Arbitration Association Any controversy or claim arising out of or relation to this contract shall be determined by Arbitration in accordance with the International Arbitration Rules of the American Arbitration Association The parties may wish to consider Adding; a. The number of arbitrators shall be ( One or Three) b. The place of Arbitration shall be (City and/or country) c. The language of the arbitration shall be.. [9]

9 London Court of International Arbitration Any dispute arising out of or in connection with this contract, including any question regarding its existence, validity or termination, shall be referred to and finally resolved by arbitration under the LCIA rules, which rules are deemed to be incorporated by reference into this clause. The number of arbitrators shall be ( One or Three) The place of the arbitration shall be ( City and / Or country) The language to be used in the arbitral proceedings shall be ( ) The governing law of the contract shall be the substantive law of () [10] Geneva Chamber of Commerce and Industry Any disputes arising with respect to or in connection with this agreement shall be finally decided by one or more arbitrators in accordance with the Rules of Arbitration of the Chamber of Commerce and Industry of Geneva. [11]

Bibliography: [1] Retrieved from http://legal-dictionary.thefreedictionary.com/MediationArbitration. Accessed on February 21, 2012

10 [2] Retrieved from http://www.hg.org/arbitration-definition.html. Accessed on February 21, 2012 [3] Retrieved from http://www.answers.com/topic/arbitration. Accessed on February 21, 2012 [4] Retrieved from Arbitration and alternative dispute resolution: How to settle International Business Disputes. Accessed on February 21, 2012 [5] Retrieved from Arbitration and alternative dispute resolution: How to settle International Business Disputes. Accessed on February 21, 2012 [7] Retrieved from Arbitration and alternative dispute resolution: How to settle International Business Disputes. Accessed on February 21, 2012 [8] Retrieved from Arbitration and alternative dispute resolution: How to settle International Business Disputes. Accessed on February 21, 2012 [9] Retrieved from Arbitration and alternative dispute resolution: How to settle International Business Disputes. Accessed on February 21, 2012 [10] Retrieved from Arbitration and alternative dispute resolution: How to settle International Business Disputes. Accessed on February 21, 2012 [11] Retrieved from Arbitration and alternative dispute resolution: How to settle International Business Disputes. Accessed on February 21, 2012