The means available for the settlement of international disputes are commonly divided into two groups. Those considered so far, namely negotiation, mediation, inquiry and conciliation, are termed diplomatic means, because the parties retain control of the dispute and may accept or reject a proposed settlement as they see fit. Arbitration and judicial settlement, on the other hand, are employed when what is wanted is a binding decision, usually on the basis of international law, and hence these are known as legal means of settlement.

Judicial settlement involves the reference of a dispute to the International Court or some other standing tribunal, such as the European Court of Human Rights. Arbitration, in contrast, requires the parties themselves to set up the machinery to handle a dispute, or series of disputes, between them. Historically arbitration was the first to develop and provided the inspiration for the creation of permanent judicial institutions. The focus of this chapter will therefore be on the earlier institution.

Forms of arbitration

Whether states are drafting a general undertaking to refer future disputes to arbitration, or negotiating a compromis (agreement) for submission of a dispute that has already arisen, the first step is to decide the kind of tribunal to be appointed. One possibility is to set up a commission consisting of equal numbers of national arbitrators, appointed by the parties, and a neutral member (or umpire) to whom cases are referred if the national members cannot agree. The origins of this form of tribunal, frequently used to deal with claims arising out of injury to aliens, can be traced back almost 200 years.