Asia needs to ensure arbitration enforceability

INTERNATIONAL arbitration has become the preferred choice for companies to settle disputes. It has various advantages over litigation, making it a more attractive proposition for the resolution of cross-border disputes. The two significant benefits being (1) neutrality - there is no perceived home-advantage for either party and; (2) enforceability - international arbitration awards are generally recognised and enforceable in the 156 countries which are signatory to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (commonly referred to as the New York Convention), compared to national court judgments which have limited enforceability in the absence of reciprocal treaty arrangements.

However, two recent high profile international arbitration cases may raise concerns and questions about the reliability of arbitration as an effective form of alternative dispute resolution in Asia.

The cases are: the ongoing dispute between Austria's Semperit Group and its joint venture partner in Thailand, Sri Trang Agro-Industry Public Company Limited; and the long-standing feud between the former owners of Indian pharmaceutical company Ranbaxy Laboratories Ltd and Daiichi Sankyo Co, the Japanese company that bought over Ranbaxy in 2008.