Application of Precedents in International Arbitration

In spite of the extensive development and use of arbitration, there is a lack of clarity on the application of precedent in international arbitration. It has been commonly accepted that international arbitration has no system of legally binding precedent; yet arbitral awards refer to past decisions, and lawyers still rely upon past decisions in support of their arguments. However, an inconsistent set of decisions and incoherence in laws persists, as there is no binding precedential value for an award. There has been an increase in demand for consistency and predictability in arbitration decisions, in order to allow the development of law. Application of a binding doctrine of precedent is often considered as a means to achieve this desired coherence and growth in international arbitration. This article identifies the application of precedent in the current regime and examines the need for a binding doctrine of precedent within the arbitration mechanism. By understanding the present use of precedent along with its benefits and costs, it becomes possible to evaluate whether the application of precedent is compatible with the arbitration mechanism. This article also explores possible approaches to applying the binding doctrine of precedent in arbitration without hampering the basic tenets of the arbitration process.