“Discourage litigation, persuade your neighbours to compromise whenever you can point out to them how the normal winner is often a looser in fees, cost and time. As a peace maker, the lawyer has a superior opportunity of being a good man”

Abraham Lincoln[i]

No matter how much of a good relationship one has with other states or countries or with foreign companies, there will always be a probability of cross- border disputes. When disputes involve individuals or organisations based in different countries, those involved are often confronted with an array of complex issues in various jurisdictions. There are often a variety of complex issues in various jurisdictions when disputes involve individuals or organisations based in different countries. Arbitration is most preferred for inter state conflicts as it has many advantages most importantly time- saving advantages. Arbitration is used to resolve disputes in both public and private sector. Due to its increased flexibility of process and procedure, arbitration is generally considered more efficient than litigation. It is shorter, cheaper, and less time-consuming. Arbitration is usually an ‘out-of-court’ method for resolving a dispute and many of the disputing parties prefer this mode because it happens between four walls and the information of the parties remain confidential.

International Arbitration- An Overview

A right cannot be enforced solely through litigation. Arbitration is another option that is increasingly used by parties in dispute. Everything has pros and cons and likewise it is the same case in arbitration. Arbitration is cheap and time saving method to solve conflicts and it is the biggest advantage but there is one underlying disadvantage i.e., there will be no Appeals. The arbitration decision is final. There are no formal appeals process available. Even if one party believes the outcome was unfair, unjust, or biased, they can’t appeal it. Basically, it is an endgame. There are several other disadvantages like enforcement of the award, legal errors, etc. Despite all this, the arbitration process is the best way to protect one’s privacy as the parties do not have go to court time and again and because of this very reason arbitration is gaining more and more interest and attention.

Arbitration has the key advantage of being flexible in choosing the panel of arbitrators, making it suitable for resolving interstate conflicts. A party’s right to pick arbitrators is not merely a formality intended to ensure that the panel will be impartial. It allows states to create panels that will have the requisite technical expertise, knowledge of the disputed area, and respect for local culture and also the customs.

Early origin of Interstate Arbitration

The origin of Arbitration as a potential dispute resolution mechanism, can be traced back to Ancient Greece, where arbitrators were not seen as a judge but diplomatic officials who closely monitored the equity of a particular case and were not bound by the letter of the law. During the Middle Ages, the use of arbitration to end wars was noticed significantly. The modern era of interstate Arbitration was marked by the Jay Treaty in 1794. It was signed between Great Britain and United States. One of the issues settled by Arbitration under the Jay Treaty was the boundary line between the remaining British possessions and the United States. Since the earliest incarnations of statehood and inter-state relations, arbitration has been used to settle territorial disputes. Another example of early Arbitration is the 1814 Treaty of Ghent, ending the War of 1812 between the United States and the United Kingdom, provided that four outstanding territorial questions between the states would be resolved by four separate arbitral panels.

Later in the 19th century, being a more peaceful era arbitrations dealing with state responsibility, injury to aliens and frequent territorial disputes were witnessed. In the early 20th Century two seminal international gatherings were held at Hague in 1899 and 1907, both dealing with the issue of peaceful settlement of disputes.[ii] These conferences resulted in two conventions for the Pacific Settlement of International Disputes, which gave extensive attention to the arbitral process, instituting the Permanent Court of Arbitration (PCA), which was supposed to provide the infrastructure for a peaceful world imagined by the conference participants.

Modern Inter-state Arbitration

One of the first and most notable inter-state territorial disputes settled by arbitration in the latter part of the 20th Century was the Western Boundary dispute between India and Pakistan, better known as the Rann of Kutch Arbitration.[iii] India and Pakistan, which became independent states in 1947 under the provisions of the British Parliament’s Indian Independence Act, abut either side of the Rann in the old British Dominion of Kutch, near the Arabian Sea. In April, 1965, armed hostilities broke out over the Rann, one of several transgressions of the peace between the parties. On June 30, 1965, an arbitration compromise was reached. Despite ongoing differences over territorial delimitation in Kashmir, the award of the tribunal, issued on February 19, 1968, was generally respected by India and Pakistan. Further, during that period only Chile and Argentina referred their territorial dispute to arbitration by Queen Elizabeth II in 1966, 51 and again in 1971 when she was asked to intervene in the recurring problem of the delimitation of the islands of the Beagle Channel.

A Solution ‘Arbitration’ for the Failure of Peace

The question is why arbitration? Why should we choose arbitration over litigation for maintaining peace? Mahatma Gandhi once said, “I realized that the true function of a lawyer was to unite parties riven asunder. The lesson was no indelibly burnt into me that a large part of my time during the twenty years of my practice as a lawyer was occupied in bringing out private compromises of hundreds of cases. I lost nothing thereby – not even money; certainly not my soul.”[iv] The conflict between the states is not a new thing. It has been taking place since earlier times. In the twenty-first century, international law faces a major challenge in resolving intra-state conflicts. Conflicts within states are on the rise. Although international law developed in an era when intra-state war was rare, the international community has overlooked using force in internal affairs.[v] The overriding objective of the international system is to maintain peace. Historically, that goal was to end wars between states. Interstate conflict is on the decline today. There is a new threat to peace. Since World War II, intra-state conflicts have been the most common. Conflicts within states are complex and multifaceted. They are “sometimes purely internal and sometimes fuelled by outside involvement”.[vi] Intra-state conflicts often involve a range of actors, including the state, state authorities and armies, population groups and sub-state armed groups, such as national liberation armies, insurgents, terrorists and mercenaries. Equally, they involve wide-ranging issues: self-determination; sovereignty; ethnic tensions; boundary disputes; control over natural resources; power sharing; and the demobilisation of armed groups.

Implementation is a difficult phase that often results in disputes. Typically, they stem from disagreements over how to interpret or implement a peace agreement. In some cases, they are caused by genuine misunderstandings, such as troops accidentally crossing a cease-fire line. Disputes of this nature may include:

1. Implementing the power sharing arrangements;

2. Boundary delimitation and/or demarcation that the parties did not agree on when the peace agreement was signed (being the subject of the Brčko and Abyei arbitrations);

3. The related issue of control over natural resources;

4. Issues around the process of disarming, transforming or demobilising armed groups and/or redeploying government armed forces (relevant in Abyei);

5. Reintegration of ex-combatants;

6. Other security and defence issues;

7. Upholding human rights and child protection; and the return of displaced persons.

In the world full of conflicts and disputes, arbitration play a role in acting as a problem solver between the parties. There are several unique advantages to arbitration as a dispute resolution tool when there is an intrastate conflict. It is a legitimate process that helps remedy the credibility problem. Disputes may be resolved through arbitration when they would otherwise not be able to. Arbitration provides some flexibility, but may give parties less autonomy than mediation or negotiation. In essence, it could allow for the resolution of disputes by impartial decision-makers. Last but not least, arbitration awards are legally binding, and they are more often followed than non-binding negotiated or mediated settlements.

Legitimacy of Arbitration

Arbitration is legitimate because it is procedurally and substantively based on legal principles. There are clearly defined, formal processes followed by legal bodies. Arbitral decisions rely on legal principles, with the exception of cases decided ex aqueo et bono,[vii] by the parties with their consent. Arbitral awards made under international law have a particular legitimacy, because it was crafted by the international community, of which the parties in the dispute are members in some capacity. Additionally, mediators work within legal frameworks.

Arbitral awards are also widely regarded as legitimate by the parties, as they control almost all aspects of the arbitration process. Due to arbitration’s long history of resolving similar disputes, it holds greater legitimacy than mediation or negotiation in the context of implementation disputes. Arbitral tribunals have long been used to resolve interstate disputes, including boundary disputes and disputes over natural resources. Many interstate conflicts are centred on disputes over borders and resources. Due to the history involved and the legal basis of arbitration, as well as the party autonomy they incorporate, many people view arbitral awards as highly legitimate.[viii]


Although Arbitration seems as a feasible remedy to resolve interstate conflicts, it is the only universal remedy for all such conflicts. There are advantages to ‘legal’ or ‘judicial’ dispute resolution, as it also necessitates states’ good faith and political will to make peace rather than wage war, as do all interstate dispute resolution mechanisms. But what makes arbitration the best suited dispute resolution mechanism is its original purpose i.e., potential to provide “mediatory decisions, exempt from the strict norms of the law of nations”, and thereby resolve “the Gordian knot of non-legal disputes”.[ix] Only when states realize this true nature of interstate arbitration, it seems, will the “Sleeping Beauty of the Peace Palace” be truly awakened.

[i] Notes for a Law Lecture‟- Home Book of American Quotations by Dodd, New York, 1967, p.226

[ii] Each of the two Hague documents is known as the Convention for the Pacific Settlement of International Disputes.

[iii] The Indo-Pakistan Western Boundary Case Tribunal, 17 R.I.A.A. 1 (1968).

[iv] Mahatma Gandhi, An Autobiography: The Story of My Experiments with Truth 134 (Beacon Press, Boston,

1993); In B.S. Krishna Murthy v. B.S. Nagaraj, AIR 2011 SC 784 the Supreme Court after quoting various passages from Mahatma Gandhi’s book ‘My Experiments with Truth’ referred the dispute to mediation.

[v] Wendy J. Miles, Daisy Mallett, The Abyei Arbitration and the Use of Arbitration to Resolve Inter-state and Intra-state Conflicts, Journal of International Dispute Settlement, Volume 1, Issue 2, August 2010, Pages 313–340,

[vi] Jenkin, Tamara, Peace Through Arbitration: Using International Arbitration to Solve Intra-State Conflicts (2018). Victoria University of Wellington Legal Research Paper, Student/Alumni Paper No. 30/2019, Available at SSRN: or

[vii] The principle refers to arbitrators’ power to disregard the law and consider only rules and conditions that they deem fair and equitable in the specific case.

[viii] Ibid.

[ix] J.H.W. Verzijl, cited in P.H. Kooijmans, “International Arbitration in Historical Perspective: Past and Present” in A.H.A. Soons, ed, International Arbitration: Past and Prospects (Martinus Nijhoff Publishers) 1990.