Clash of interests is in the very nature of business. This clash leads to commercial disputes, which need to be resolved promptly, for in commerce time is a precious asset.
Since courts have to deal with a number of cases and they cannot let go of the formal legal procedure, it was thought to be in the better interest of trade if there was an alternative dispute redressed mechanism. Commercial Arbitration, thus, came in.
International Commercial Arbitration (ICA) arises out of commercial relationships, whether contractual or otherwise, where at least one of the parties is an individual who is a national of another country, a body corporate which is incorporated in any other country, a company or an association or a body of individuals whose central management and control is exercised in any country outside India, or the government of a foreign country.
The greatest difficulty, however, is regarding the enforceability of the arbitral award made in one country to be enforced by another through the courts. After all, if the awards are unenforceable the very purpose of having a dispute redressed mechanism is defeated. There are International Conventions that try to address the problem.
In India the arbitral machinery is provided for in the Arbitration and Conciliation Act, which enunciates the law of conciliation and provides for International Commercial Arbitration as well.