2. The elements o f the classical characterization o f the concept of arbitration

Arbitration is a mechanism for dispute resolution by private individuals. Arbitrators do not hold public office and are not vested with pre-existing jurisdictional powers, which they acquire only because of the parties’ consent. The parties may, within the limits of the relevant law, confer powers upon the arbitral tribunal directly or indirectly. They have the ultimate power to determine the form, structure, system and other details of the arbitration. However, while the jurisdictional function of the arbitrators is fundamentally analogous to that of judges, arbitrators have no capability to make use of the coercive powers over property and persons that are conferred by the State upon a national court when exercising their function.

The reason for this is that the source of the jurisdictional authority of arbitral tribunals is strictly private.

1.2The consensual nature o f arbitration

The principal characteristic of arbitration is that it is chosen by the parties by concluding an agreement to arbitrate. This is considered the foundation stone of international commercial arbitration, as it records the consent of the parties to submit to arbitration—a consent which is indispensable to any process of dispute resolution outside national courts. Such processes depend for their very existence upon the agreement of the parties. Hence this element of consent is essential, as without it there can be no valid arbitration. The contractual arrangement must be understood broadly, in the sense that the parties’ consent can be given in different ways and successively. Therefore, the contractual nature of arbitration does not mean that the arbitration agreement must be ‘reciprocal’, it give the parties the same right to refer disputes to arbitration. Indeed, it is possible to confer upon one party the unilateral right to initiate an arbitration proceeding. Notwithstanding these particularities, in investment arbitration—like in commercial arbitration—the attempt to emancipate arbitration from a State justice system is clear and unavoidable. It has also been observed that continental European jurists,32 in particular, attach great importance to the wishes of the parties.

1.3 An alternative to national courts

By agreeing to arbitration the parties remove their relationships and disputes from the

jurisdiction of national courts altogether. In fact, the parties not only choose not to submit their disputes to the default national courts but, by refusing to conclude a jurisdiction agreement, they also choose not to submit the disputes to alternative national courts. However, this aspect of the characterization of arbitration has, with regard to international arbitration, been criticized as well. Lalive argued that to speak of removal of the dispute from ordinary State jurisdiction has no or, at least, another sense in international arbitration, where one of the essential scopes of the arbitration agreement is precisely to prevent the conflict of jurisdictions and to remedy the extreme incertitude which in general reigns with regard to the determination of this ‘ordinary judge’. Moreover, it has been observed that while a forum selection clause is concerned with the rules that determine which forum may hear a dispute, the arbitration agreement is an act which vests jurisdictional power in a given jurisdiction in the first place (here, a specified arbitral tribunal). Therefore, arbitration agreements, contrarily to jurisdiction agreements which keep the dispute within the boundaries of the jurisdiction of national courts, take it to a different adjudicatory forum. The result of this difference in the nature of the arbitration agreement is that certain assumptions have been made regarding the parties’ presumed intent in including such a clause in their contractual relations. Indeed, because of the specific nature and far-reaching consequences of choosing an arbitration clause, there is a presumption that the level of intent—the volitional intensity— from parties who consent to insert such clauses is greater than the level of intent in selecting a mere forum selection clause.